Use the following to answer question:
-(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is a monopolist,how many lunches will he produce in the long run?
A)0
B)10
C)20
D)30

Question

Use the following to answer question: 
-(Table: Lunch)Use Table: Lunch.This table shows market demand for picnic lunches for people taking all-day rafting trips on the river.Joe has a firm providing this service,and his marginal cost and average cost for each lunch are a constant $4.If Joe is a monopolist,how many lunches will he produce in the long run?
A)0 
B)10 
C)20 
D)30

Quizplus · Accepted Answer

In a monopolistic market, the producer will aim to maximize profit by producing at a quantity where marginal cost (MC) equals marginal revenue (MR). Without the specific numbers from the table, we can infer that if Joe's marginal and average costs are constant at $4, he will produce at a level where the marginal revenue from selling an additional lunch is also $4. Since monopolists also consider the demand curve to set their price, the exact quantity produced will depend on where this equilibrium occurs. Given the options and the information provided, the best inference is that he will produce the quantity that aligns with maximizing his profit, which, based on the options given and the typical behavior of a monopolist, would be 30 lunches, assuming this quantity allows him to equate MC and MR and still sell all lunches.

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