Scenario 15-4
Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10.
-Refer to Scenario 15-4. The profit-maximizing monopolist will charge a price of

Question

Quizplus · Accepted Answer

The profit-maximizing monopolist will set marginal revenue equal to marginal cost. In this case, MR=90-2Q and MC=$10. Setting these two equations equal to each other, we get 90-2Q=$10. Solving for Q, we get Q=40. Substituting Q=40 back into the demand curve, we get P=90-Q=$50. Therefore, the profit-maximizing monopolist will charge a price of $50.

Scenario 15-4 Suppose a Monopolist Has a Demand Curve That Can Be