Use the following to answer question:
Figure: The Monopolist
-(Scenario: Monopolist)Use Scenario: Monopolist.The profit-maximizing output is _____ units,and the profit-maximizing price is _____. Scenario: Monopolist
The demand curve for a monopolist is P = 75 - 0.5Q,and the monopolist's marginal cost curve is defined using the equation MC = 2Q.Assume also that ATC at the profit-maximizing level of production is equal to $12.50.
A)25;$75.00
B)20;$62.50
C)25;$75.50
D)25;$62.50

Question

Use the following to answer question:
Figure: The Monopolist 
-(Scenario: Monopolist)Use Scenario: Monopolist.The profit-maximizing output is _____ units,and the profit-maximizing price is _____. Scenario: Monopolist
The demand curve for a monopolist is P = 75 - 0.5Q,and the monopolist's marginal cost curve is defined using the equation MC = 2Q.Assume also that ATC at the profit-maximizing level of production is equal to $12.50.
A)25;$75.00 
B)20;$62.50 
C)25;$75.50 
D)25;$62.50

Quizplus · Accepted Answer

To find the profit-maximizing output, we need to set the monopolist's marginal revenue (MR) equal to its marginal cost (MC) and solve for Q:
MR = P + (dP/dQ)Q
MR = 75 - Q
Setting MR = MC:
75 - Q = 2Q
Q = 25
To find the profit-maximizing price, we plug Q = 25 into the demand equation:
P = 75 - 0.5(25) = 62.5
Therefore, the profit-maximizing output is 25 units and the profit-maximizing price is $62.50. The correct answer is D.

Use the Following to Answer Question