SCENARIO: A MONOPOLIST
A monopolist faces a demand curve given by P = 20 - Q and has total
Costs given by TC = Q2.By using a bit of calculus, you should be able
To determine that the firm's marginal revenue is MR = 20 - 2Q and its
Marginal cost is MC = 2Q.
Reference: Ref 91
(Scenario: A Monopolist) What is its profitmaximizing price?

Question

SCENARIO: A MONOPOLIST
A monopolist faces a demand curve given by P = 20 - Q and has total
Costs given by TC = Q2.By using a bit of calculus, you should be able
To determine that the firm's marginal revenue is MR = 20 - 2Q and its
Marginal cost is MC = 2Q.
Reference: Ref 9­1
(Scenario: A Monopolist) What is its profit­maximizing price?

Quizplus · Accepted Answer

The monopolist's profit-maximizing output level can be found by setting MR = MC:
20 - 2Q = 2Q
20 = 4Q
Q = 5
Therefore, the profit-maximizing price is found by plugging in this output level to the demand equation:
P = 20 - Q
P = 20 - 5
P = $15. So, the best choice is B) $15.

SCENARIO: a MONOPOLIST A Monopolist Faces a Demand Curve Given by P =