Scenario 16-2
Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q.
-Refer to Scenario 16-2. If the marginal cost of producing this good is 0, what quantity would a profit-maximizing monopolist produce?
A)Q = 0
B)Q = 2
C)Q = 5
D)Q = 10

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist produces where marginal cost equals marginal revenue, which in this case is where 20 - 2Q = 0. Solving for Q, we get Q = 10. Therefore, the monopolist would produce a quantity of 10.

Scenario 16-2 Suppose Market Demand for a Product Is Given by the by the Equation