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3 years ago

Demand and cost information for a monopoly

Business

1 answer:

sattari [20]3 years ago

8 0

Question:

Please see the Demand and Cost information reproduced in the attached table

Answer:

The correct choice is A)

Profit if maximized where price is equal to $20.

At this price, MR = MC.

Please see the attached PDF.

Explanation:

The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost:

That is, the point where MR = MC.

If the monopoly produces a lower quantity, then MR > MC at those levels of output, and the firm can make higher profits by expanding output.

Cheers!

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