A monopolist faces the inverse demand curve p = 64 -2q.At what level of output is his total revenue maximized?
A)24
B)26
C)8
D)32
E)16

Question

Quizplus · Accepted Answer

To find the level of output where total revenue is maximized, we need to find the quantity at which the marginal revenue equals zero. Using the inverse demand equation, we can find the monopolist's total revenue function:

TR(q) = p*q = (64 - 2q)*q = 64q - 2q^2

The monopolist's marginal revenue function is the derivative of the total revenue function with respect to q:

MR(q) = 64 - 4q

Setting MR(q) equal to zero and solving for q:

64 - 4q = 0

q = 16

Therefore, the monopolist's total revenue is maximized at a quantity of 16.

A Monopolist Faces the Inverse Demand Curve P = 64