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 price will the monopolist charge in order to maximize profits
A)$12.50
B)$25.00
C)$55.00
D)$84.50

Quizplus · Accepted Answer

To maximize profits, a monopolist sets MR = MC. Here, 100 - 5Q = 25, solving for Q gives Q = 15. Substituting Q = 15 into the demand equation P = 100 - 3Q gives P = 100 - 3(15) = 55.