-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hay. 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) profit will be maximised.
B) marginal revenue will be maximised.
C) marginal revenue will be negative.
D) marginal revenue will exceed marginal cost.
E) both the marginal revenue and the price will be negative.

Question

-Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hay. 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) profit will be maximised. 
B) marginal revenue will be maximised. 
C) marginal revenue will be negative. 
D) marginal revenue will exceed marginal cost. 
E) both the marginal revenue and the price will be negative.

Quizplus · Accepted Answer

If the Busy Bee produces 40 hamburgers per hour, marginal revenue will be negative because, in a monopoly, producing beyond the point where marginal revenue equals marginal cost typically results in negative marginal revenue.

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