Answer:
The correct option is a.5.
Step-by-step explanation:
Note: This question is not complete as some important signs are committed from it. The complete question is therefore provided before answering the question as follows:
A monopolist faces a demand curve given by P = 20 - Q and has total costs given by TC = Q2. By using a bit of calculus, you should be able to determine that the firm's marginal revenue is MR = 20 - 2Q and its marginal cost is MC = 2Q. What is its profit-maximizing output level?
a.5
b.6
c.7
d.8
The explanation of the answer to the question is now provided as follows:
A monopolist refers to the a person or company who is the only supplier of a commodity in the market.
For a monopolist, profit is maximized when marginal revenue (MR) is equal to the marginal cost (MC). That is, where MR = MC. This implies that the profit-maximizing output level of a mopolist can be obtained by setting MR equal to MC.
Since in the question, we are given the following:
MR = 20 - 2Q ………………………………………. (1)
MC = 2Q ……………………………………………… (2)
We can therefore equate equations (1) and (2) and solve for Q as follows:
MR = MC
20 – 2Q = 2Q
20 = 2Q + 2Q
4Q = 20
Q = 20 / 4
Q = 5. This is the profit maximizing output level.
Therefore, the correct option is a.5.