Table 15-4
A monopolist faces the following demand curve:
-Refer to Table 15-4. In order to maximize profits, the monopolist should produce
A)7.5 units.
B)10 units.
C)where marginal revenue equals marginal cost.
D)Both a and c are correct.

Question

Table 15-4
A monopolist faces the following demand curve: 
-Refer to Table 15-4. In order to maximize profits, the monopolist should produce
A)7.5 units. 
B)10 units. 
C)where marginal revenue equals marginal cost. 
D)Both a and c are correct.

Quizplus · Accepted Answer

In order to maximize profits, the monopolist should produce where marginal revenue (MR) equals marginal cost (MC). Looking at the table, the MC of producing 10 units is $45, which also happens to be the price at which MR equals MC. Therefore, producing 10 units is the optimal choice for the monopolist to maximize profits.

Table 15-4 A Monopolist Faces the Following Demand Curve