A monopoly produces widgets at a marginal cost of $10 per unit and zero fixed costs.It faces an inverse demand function given by P = 50 − Q.Which of the following is the marginal revenue function for the firm?
A) MR = 60 − 2Q
B) MR = 50 − Q
C) MR = 100 − Q
D) MR = 50 − 2Q

Question

Quizplus · Accepted Answer

The marginal revenue (MR) function can be derived from the inverse demand function, P = 50 - Q, by doubling the slope of the demand curve. Therefore, MR = 50 - 2Q.

A Monopoly Produces Widgets at a Marginal Cost of $10