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a monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost...

a monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product:

Q=200-2P

MR=100-Q

TC=5Q

MC=5

What level of output maximizes total revenue?

A) 95 B) 0 C) 90 D)100

What is the profit maximizing level output?

A)0 B)100 C)90 D)95

How much profit does the monopolist earn?

A)4512.50 B)5.00 C)475.00 D)4987.50

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Answer #1

Answer

What level of output maximizes total revenue?

Option

D)100

total revenue is maximum when MR=0

100-Q=0 then Q=100

What is the profit-maximizing level output?

Option

D)95

the profit is maximum at MR=MC

100-Q=5

Q=95 units

95=200-2P

2P=105

P=52.5

How much profit does the monopolist earn?

Profit=TR-TC

=P*Q-5Q=52.5Q-5Q

=47.5*95

=4512.5

the profit is $4512.5

Option A

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