Question

The data below relate to a monopolist and the product it produces. If the firm wants to produce where marginal revenue equals marginal cost, what output and price will it choose? Quantity Price per Unit Total Cost 0 $22 $20 1 $20 $24 2 $18 $27 3 $15 $32 4 $14 $40 5 $12 $49 6 $10 $59

Answer 1

$12 and 40 units.

Monopolist is a price Maker. He will determine the quantity of output that will maximize revenue. The monopolist faces a downward sloping demand curve because he can sell more if he lowers the price. The profit maximizing price and output is where marginal revenue equals marginal cost, then it is extended to the market demand curve to determine what market price corresponds to that quantity.

Step-by-step explanation:

See attached file