If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal costs of MC = 1,100 + 2Q, then the firm will produce:
A) 542 units.
B) 150 units.
C) 200 units.
D) 900 units.

Question

Quizplus · Accepted Answer

To find the profit-maximizing quantity, set marginal revenue (MR) equal to marginal cost (MC). First, derive the MR from the demand curve: MR = 2,000 - 4Q. Set MR = MC: 2,000 - 4Q = 1,100 + 2Q. Solving for Q gives Q = 150 units.

If a Firm with Monopoly Pricing Power in the Market