Suppose a monopolist faces the following demand curve. The monopolist maximizes its profits by:
A)charging $70 for each unit.
B)producing 35 units, since this is where total revenue is maximized.
C)producing the level of output at which marginal revenue minus marginal cost is greatest.
D)producing the level of output at which marginal revenue equals marginal cost.

Question

Suppose a monopolist faces the following demand curve.  The monopolist maximizes its profits by:
A)charging $70 for each unit. 
B)producing 35 units, since this is where total revenue is maximized. 
C)producing the level of output at which marginal revenue minus marginal cost is greatest. 
D)producing the level of output at which marginal revenue equals marginal cost.

Quizplus · Accepted Answer

Like a perfectly competitive firm, a monopolist maximizes profit by choosing the output level at which marginal revenue equals marginal cost.

Suppose a Monopolist Faces the Following Demand Curve