A monopoly produces widgets at a marginal cost of $8 per unit and zero fixed costs.It faces an inverse demand function given by P = 38 − Q.The monopoly price is:
A) $30.
B) $23.
C) $15.
D) $8.

Question

Quizplus · Accepted Answer

To find the monopoly price, we need to find the quantity where marginal cost equals marginal revenue, and then plug that quantity into the demand function to get the price. 
The monopolist's marginal revenue is the derivative of the inverse demand function, which is 
MR = d(P)/dQ = 38 - 2Q. 
Setting MR equal to MC and solving for Q, we get 
38 - 2Q = 8 
2Q = 30 
Q = 15.

So the monopoly quantity is 15. To find the price, we plug Q = 15 into the inverse demand function: 
P = 38 - Q 
P = 38 - 15 
P = $23.

Therefore, the correct answer is B) $23.

A Monopoly Produces Widgets at a Marginal Cost of $8