The following figure shows the demand and marginal revenue (MR) curves faced by a monopolist.

-Refer to the figure above.What is the profit-maximizing quantity that the monopolist should produce if it faces a constant marginal cost of $3?

Question

The following figure shows the demand and marginal revenue (MR) curves faced by a monopolist.
 
-Refer to the figure above.What is the profit-maximizing quantity that the monopolist should produce if it faces a constant marginal cost of $3?

Quizplus · Accepted Answer

The profit-maximizing quantity for a monopolist is where marginal revenue (MR) equals marginal cost (MC). In this case, since marginal cost is constant and equal to $3, the profit-maximizing quantity occurs where MR = MC = $3.
Looking at the graph, we see that MR = $3 occurs at a quantity of 300 units. Thus, the monopolist should produce 300 units to maximize profits.

The Following Figure Shows the Demand and Marginal Revenue (MR)