The following figure represents the cost and revenue curves of a firm that is producing a service in a monopoly market.

-Refer to the figure above. What is the optimal quantity that the monopolist should produce?

Question

The following figure represents the cost and revenue curves of a firm that is producing a service in a monopoly market.

-Refer to the figure above. What is the optimal quantity that the monopolist should produce?

Quizplus · Accepted Answer

The optimal quantity for a monopolist is where marginal cost (MC) equals marginal revenue (MR). Typically, this is represented by Q₂ in diagrams where the MR curve intersects the MC curve.

The Following Figure Represents the Cost and Revenue Curves of a Firm