The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5

-Refer to Table 10.5.If marginal cost is $30 in both markets,what quantities will be supplied in each of the markets?
A)4 units in market X; 1 unit in market Y
B)4 units in market X; 2 units in market Y
C)2 units in market X; 3 units in market Y
D)3 units in market X; 3 units in market Y
E)3 units in market X; nothing in market Y

Question

The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 10.5
 
-Refer to Table 10.5.If marginal cost is $30 in both markets,what quantities will be supplied in each of the markets?
A)4 units in market X; 1 unit in market Y 
B)4 units in market X; 2 units in market Y 
C)2 units in market X; 3 units in market Y 
D)3 units in market X; 3 units in market Y 
E)3 units in market X; nothing in market Y

Quizplus · Accepted Answer

To maximize profit, the monopolist will produce where marginal cost equals marginal revenue. In market X, the marginal revenue is highest at a quantity of 3, where it equals $45, which is greater than the marginal cost of $30. In market Y, the marginal revenue is highest at a quantity of 3, where it equals $25, which is also greater than the marginal cost of $30. Therefore, the monopolist will produce 3 units in each market, resulting in a total quantity supplied of 6 units.

The Following Table Shows the Marginal Revenues Earned by a Price