Scenario 15-3
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34.
-Refer to Scenario 15-3. At Q = 500, the firm's marginal cost is
A)less than $30.
B)$30.
C)$34.
D)greater than $34.

Question

Quizplus · Accepted Answer

To maximize profit, a monopoly firm produces where marginal revenue (MR) equals marginal cost (MC). Here, the firm produces at Q = 500 units of output where MR = $30. Therefore, MC must also be $30. This makes option B the correct answer.

Scenario 15-3 A Monopoly Firm Maximizes Its Profit by Producing Q =