Figure 1 Model for a Monopoly Market Price I Marginal Cost 20 15 10 Demand 100 Quantity 150 200 Marginal Revenue Refer to Figure 1

Economics Dec 13, 2020

Figure 1 Model for a Monopoly Market Price I Marginal Cost 20 15 10 Demand 100 Quantity 150 200 Marginal Revenue Refer to Figure 1. What is the profit maximizing quantity for the producer to produce ? A 100 B 150 ? none of th above D 200 Figure 2 depicts a situation in a monopolistically competitive market.

Expert Solution

A monopolist make quantity decision similar to a perfectly competitive market but his price decisions differs because he is a price maker, not price-taker. To maximize profit, a monopolist will set a quantity level at which margins cost curve cuts marginal revenue curve. Here, profit maximizing quantity would be 100 units because at this output level, MC cuts MR. Hence, the correct option is: A. 100.

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote