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

-Refer to the figure above.If the monopolist faces a constant marginal cost of $10,what is the optimal quantity that it should produce?

Question

The following figure shows the marginal revenue (MR) and demand curves faced by a monopolist.
 
-Refer to the figure above.If the monopolist faces a constant marginal cost of $10,what is the optimal quantity that it should produce?

Quizplus · Accepted Answer

The monopolist should produce at the quantity where marginal cost equals marginal revenue. In this case, marginal cost is constant at $10, so the monopolist should produce at the quantity where marginal revenue is also $10. The graph shows that marginal revenue is $10 at a quantity of 20 units, so the monopolist should produce 20 units.

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