If a monopolist faces a demand curve given by p = a - by, then TR is maximized when:
A)MR(y)= a - 2by = MC(y).
B)y = a/b.
C)p = a/b.
D)y = a/(2b).

Question

Quizplus · Accepted Answer

To maximize total revenue, we need to choose the quantity where marginal revenue (MR) equals zero. Using the demand curve, we can derive the monopolist's MR function as MR = a - 2by. Setting MR equal to zero and solving for y, we get y = a/(2b). Therefore, the monopolist should choose quantity y = a/(2b) to maximize total revenue.

If a Monopolist Faces a Demand Curve Given by P