Scenario 16-3
Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q.
-Refer to Scenario 16-3.If the marginal cost of producing this good is 0,what quantity would a profit-maximizing monopolist produce?

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist would produce where marginal revenue (MR) equals marginal cost (MC). Since the marginal cost is given as zero, we can set MR equal to zero and solve for Q:

20 - 2Q = 0
2Q = 20
Q = 10

Therefore, at a quantity of 10, the monopolist would produce and set a price of:
P = 20 - Q = 20 - 10 = 10.

Scenario 16-3 Suppose Market Demand for a Product Is Given by the by the Equation