Question

Suppose marginal cost is constant and equal to 50 and marginal revenue equals 100 - 10Q. A profit-maximizing monopolist will set quantity equal to:

Answer 1

Answer: 5

Explanation:

From the question, we are informed that the marginal cost is constant and equal to 50 and marginal revenue equals 100 - 10Q.

For a profit-maximizing monopolist, we should note that the marginal revenue will be equated to the marginal cost. Therefore:

100 - 10Q = 50

100 - 50 = 10Q

50 = 10Q

Q = 50/10

Q = 5

Therefore, a profit-maximizing monopolist will set quantity equal to 5.