If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost 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 quantity produced by a monopolist, we set marginal revenue (MR) equal to marginal cost (MC). First, we need to find the MR. The demand curve is P = 2,000 - 2Q. To find MR, we double the slope of the demand curve, so MR = 2,000 - 4Q. Setting MR equal to MC gives us 2,000 - 4Q = 1,100 + 2Q. Solving for Q, we get 6Q = 900, so Q = 150 units.

If a Firm with Monopoly Pricing Power in the Market