A monopoly faces the demand curve . The monopoly has a constant unit cost equal to 5 for and a constant unit cost equal to 3 for . Its profit maximizing output equals:
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DSE 2009 Question 14: Monopoly and price discrimination
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A monopoly faces the demand curve P=8-Q. The monopoly has a constant unit cost equal to 5 for Q≤ 2 and a constant unit cost equal to 3 for Q>2. Its profit maximizing output equals: (A) 3/2 (B) 2 (C) 5/2 (D) Both 3/2 and 5/2
Also written as: A monopoly faces the demand curve P=8-Q. The monopoly has a constant unit cost equal to 5 for Q<= 2 and a constant unit cost equal to 3 for Q>2. Its profit maximizing output equals:
Monopoly and price discrimination has come up 128 times in 7 exams since 2004.
What this question tests
This question is on Monopoly equilibrium and marginal revenue, part of Monopoly and price discrimination in Microeconomics.
How a monopolist sets price and output where marginal revenue equals marginal cost.
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