Suppose a monopolist faces the demand curve shown below. The monopolist maximizes its profits by:

Question

Suppose a monopolist faces the demand curve shown below.  The monopolist maximizes its profits by:

Quizplus · Accepted Answer

The monopolist maximizes its profits at the level of output where marginal revenue equals marginal cost. In this case, that occurs at an output of 25 units, where the marginal cost curve intersects the marginal revenue curve. At this output level, the monopolist can charge a price of $50 per unit and earn a total profit of $500.

Suppose a Monopolist Faces the Demand Curve Shown Below