Total Output Price Marginal
Revenue
Average
Total Cost
Marginal
Cost
1 $100 $100 $100.00 $30
2 90 80 63.00 26
3 80 60 52.67 32
4 70 40 49.50 40
5 60 20 49.60 50
6 50 0 50.00 52
7 40 -20 52.29 66
8 30 -40 55.75 80
9 20 -60 60.67 100
10 10 -80 67.60 130
Refer to the data for a non discriminating monopolist.At its profit-maximizing output, this firm will be operating in the
A)perfectly elastic portion of its demand curve.
B)perfectly inelastic portion of its demand curve.
C)elastic portion of its demand curve.
D)inelastic portion of its demand curve.

Question

Quizplus · Accepted Answer

The profit-maximizing output is where marginal revenue equals marginal cost. In this case, marginal revenue is $40 and marginal cost is $40, so the profit-maximizing output is 4 units. At this output, the demand curve is elastic, because the percentage change in quantity demanded is greater than the percentage change in price.