Table 14-17

-Refer to Table 14-17.If a monopolist faces a constant marginal cost of $3,how much output should the firm produce in order to equate marginal revenue with marginal cost?

Question

Table 14-17
 
-Refer to Table 14-17.If a monopolist faces a constant marginal cost of $3,how much output should the firm produce in order to equate marginal revenue with marginal cost?

Quizplus · Accepted Answer

To equate marginal revenue with marginal cost, the monopolist should produce at the output level where MR=MC. Looking at the table, the marginal revenue for each unit of output decreases as the quantity produced increases. The marginal cost of production, however, remains constant at $3 per unit. At output level Q=4, the marginal revenue is also $3, which is equal to the marginal cost. Therefore, the firm should produce 4 units to maximize its profits.

Table 14-17 -Refer to Table 14-17.If a Monopolist Faces a Constant Marginal