Question
The demand curve for a monopoly firm is p= 80-0.5q. If the MC is constant at Rs 10, find the profit-maximizing level of output.
Answer: Option C
:
C
Given that demand curve is p= 80-0.5 q
The slope of demand curve = 0.5
Slope of MR curve = 2 × 0.5= 1
The equation of the MR curve is MR = 80-q
Equating MR=MC, we get 80 -q = 10
Hence, the profit-maximizing output is 70
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:
C
Given that demand curve is p= 80-0.5 q
The slope of demand curve = 0.5
Slope of MR curve = 2 × 0.5= 1
The equation of the MR curve is MR = 80-q
Equating MR=MC, we get 80 -q = 10
Hence, the profit-maximizing output is 70
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