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 monopolist is currently producing 400 computers per year and it seeks to maximize profit, it should: $$\begin{array} { | r | r | }
\hline { \begin{array} { c }
\text { Price df } \
\text { computer s(t) }
\end{array} } & \text { Quantity demanded per year } \
\hline 5,000 & 100 \
\hline 4,000 & 200 \
\hline 3,000 & 300 \
\hline 2,000 & 400 \
\hline 1,000 & 500 \
\hline
\end{array}$$
A) increase output.
B) decrease output.
C) continue producing 400 units per year.
D) lower the price of computers.

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 monopolist is currently producing 400 computers per year and it seeks to maximize profit, it should: $$\begin{array} { | r | r | } 
\hline { \begin{array} { c } 
\text { Price df } \
\text { computer s(t) }
\end{array} } & \text { Quantity demanded per year } \
\hline 5,000 & 100 \
\hline 4,000 & 200 \
\hline 3,000 & 300 \
\hline 2,000 & 400 \
\hline 1,000 & 500 \
\hline
\end{array}$$
A) increase output.
B) decrease output.
C) continue producing 400 units per year.
D) lower the price of computers.

Quizplus · Accepted Answer

To maximize profit, a monopolist should produce where marginal revenue equals marginal cost. At 400 units, the price is $2,000, but the firm can increase profit by reducing output to increase the price and marginal revenue.

Refer to the Table Shown, Which Shows the Demand Schedule