-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo,Oklahoma.The above figure represents the demand,marginal revenue,and marginal cost curves for this establishment.If the Busy Bee produces 40 hamburgers per hour,then
A) marginal revenue will exceed marginal cost.
B) profit will be maximized.
C) marginal revenue will be negative.
D) marginal revenue will be maximized.
E) both the marginal revenue and the price will be negative.

Question

-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo,Oklahoma.The above figure represents the demand,marginal revenue,and marginal cost curves for this establishment.If the Busy Bee produces 40 hamburgers per hour,then
A) marginal revenue will exceed marginal cost. 
B) profit will be maximized. 
C) marginal revenue will be negative. 
D) marginal revenue will be maximized. 
E) both the marginal revenue and the price will be negative.

Quizplus · Accepted Answer

At the quantity where marginal revenue is negative, producing more units would decrease total revenue. In a monopoly, marginal revenue becomes negative when the firm produces beyond the quantity that maximizes total revenue.

-Suppose the Busy Bee Café Is the Monopoly Producer of Hamburgers