Refer to the table shown, which shows the demand schedule for a firm that has a monopoly on the sale of computers in the country of Oz. If the marginal cost of producing computers is $1,000 no matter how many are produced and the monopolist seeks to maximize profit, it should set the price of computers at: $$\begin{array} { | r | r | }
\hline{ \begin{array} { c }
\text { Price of } \
\text { computers (\$) }
\end{array} } & \text { Quantity demanded per year } \
\hline 5,000 & 100 \
\hline 4,000 & 200 \
\hline 3,000 & 300 \
\hline 2,000 & 400 \
\hline 1,000 & 500 \
\hline
\end{array}$$
A) $1,000.
B) $2,000.
C) $3,000.
D) $4,000.

Question

Refer to the table shown, which shows the demand schedule for a firm that has a monopoly on the sale of computers in the country of Oz. If the marginal cost of producing computers is $1,000 no matter how many are produced and the monopolist seeks to maximize profit, it should set the price of computers at: $$\begin{array} { | r | r | } 
\hline{ \begin{array} { c } 
\text { Price of } \
\text { computers (\$) }
\end{array} } & \text { Quantity demanded per year } \
\hline 5,000 & 100 \
\hline 4,000 & 200 \
\hline 3,000 & 300 \
\hline 2,000 & 400 \
\hline 1,000 & 500 \
\hline
\end{array}$$
A) $1,000.
B) $2,000.
C) $3,000.
D) $4,000.

Quizplus · Accepted Answer

To maximize profit, the monopolist should produce where marginal cost equals marginal revenue. At a price of $3,000, the quantity demanded is 300, and the marginal revenue is closest to the marginal cost of $1,000.

Refer to the Table Shown, Which Shows the Demand Schedule