Table 9.1 A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 9.1.
-Refer to Table 9.1.The amount of the firm's profit is
A)$335
B)$350
C)$880
D)$910

Question

Table 9.1  A monopoly producer of foreign language translation software faces a demand and cost structure as given in Table 9.1.
-Refer to Table 9.1.The amount of the firm's profit is
A)$335 
B)$350 
C)$880 
D)$910

Quizplus · Accepted Answer

To maximize profit, a monopolist will produce where MR=MC.

From the table, for Q=5, MR=MC=$70. Therefore, the monopolist will produce 5 units of software.

Total revenue at Q=5 is $350 (5*$70). 
Total cost at Q=5 is $285 (50+5*7+5*4).

Therefore, the amount of profit at Q=5 is $65 ($350-$285). None of the other options provide a higher profit than $65. Therefore, the best choice is B.

Table 91 a Monopoly Producer of Foreign Language Translation Software