Suppose Acme and Mega produce and sell identical product with zero marginal and average cost.Following is the market demand and marginal revenue curves for the product.
Refer to the figure above.The profit-maximizing quantity and price for a monopolist with this demand curve are _____.
A)50 units and $2
B)100 units and $2
C)50 units and $3
D)100 units and $1

Question

Suppose Acme and Mega produce and sell identical product with zero marginal and average cost.Following is the market demand and marginal revenue curves for the product. 
Refer to the figure above.The profit-maximizing quantity and price for a monopolist with this demand curve are _____.
A)50 units and $2 
B)100 units and $2 
C)50 units and $3 
D)100 units and $1

Quizplus · Accepted Answer

When marginal cost is zero,it equals marginal revenue at a quantity of 100.The price that corresponds with that quantity is $2.

Suppose Acme and Mega Produce and Sell Identical Product with Zero