A monopolist has constant marginal costs at Re 1 per unit, and zero fixed costs. It faces the demand curve where is price.
What is the profit maximizing choice of output?
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4 marks, −1MicroeconomicsMonopoly and price discriminationMonopoly equilibrium and marginal revenueHardabout 3 min
JNU SIS 2013 Question 4: Monopoly and price discrimination
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A monopolist has constant marginal costs at Re 1 per unit, and zero fixed costs. It faces the demand curve D(p) = { 100/p, p ≤ 20; 0, p > 20 } where p is price. What is the profit maximizing choice of output? (A) 20 (B) 5 (C) 1/99 (D) 10
Also written as: A monopolist has constant marginal costs at Re 1 per unit, and zero fixed costs. It faces the demand curve D(p) = { 100/p, p <= 20; 0, p > 20 } where p is price. What is the profit maximizing choice of output?
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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