A monopolist faces the following demand curve:Price$10$9$8$7$6$5$4$3Quantity5Select one:O a. 31 unitsO b.7 unitsO c. 16 unitsO d. 23 units10162331455260The monopolist has total fixed costs of $40 and a constant marginal cost of $5. What is theprofit-maximizing level of output?

A monopolist is a market participant with exclusive control over the supply of a particular product or service, allowing it to set prices and influence market dynamics without competition.To find the profit-maximizing level of output for a monopolist, we need to identify the quantity where marginal cost equals marginal revenue. The marginal revenue (MR) curve for a monopolist is twice as steep as the demand curve.Given the demand and price information, we can calculate the total revenue (TR) and marginal revenue (MR) at each quantity. The marginal cost (MC) is given as $5.Let's calculate the MR and find the profit-maximizing level of output:QuantityPriceTRMRMC5$10$50--10$9$90$40$516$8$128$38$523$7$161$33$531$6$186$25$545$5$225$15$552$4$208-$560$3$180-$5Here, MR is calculated using the formula: MR=ΔTR/ΔQ.The profit-maximizing level of output occurs where MR equals MC. From the calculations, it happens at a quantity of 16 units. Therefore, the correct answer is:c. 16 units

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Economics

The monopolist has total fixed costs of $40 and a constant marginal cost of $5. What is the profit-maximizing level of output?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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