Figure 7.1
-Figure 7.1 shows a monopolist's demand curve. If the monopolist were to maximize its total revenue, it would produce ________ units of output and charge a price of ________.
A) 3; $5
B) 4; $4
C) 5; $3
D) 6; $2

Question

Figure 7.1
-Figure 7.1 shows a monopolist's demand curve. If the monopolist were to maximize its total revenue, it would produce ________ units of output and charge a price of ________.
A) 3; $5 
B) 4; $4 
C) 5; $3 
D) 6; $2

Quizplus · Accepted Answer

To maximize total revenue, a monopolist would operate where the demand curve is elastic. This point is typically at the midpoint of a linear demand curve, where marginal revenue equals zero. In this scenario, without seeing the actual demand curve, the correct answer is inferred based on the pattern that as quantity increases, price decreases. Thus, producing 4 units and charging $4 each maximizes total revenue, assuming a linear and downward-sloping demand curve.

Figure 7.1 -Figure 7.1 Shows a Monopolist's Demand Curve. If the Monopolist