A monopolist faces market demand given by P = 100

Question

A monopolist faces market demand given by P = 100 - 3Q.For this market,MR = 100 - 5Q and MC = 25.What quantity of output will the monopolist produce in order to maximize profits
A)15
B)25.0
C)62.5
D)75.0

Quizplus · Accepted Answer

To maximize profits, a monopolist sets marginal revenue (MR) equal to marginal cost (MC). Given MR = 100 - 5Q and MC = 25, setting them equal gives 100 - 5Q = 25. Solving for Q gives Q = 15.