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Questions

ECON1-TTh Chapter 16 Assignment

Single choice

P Q $20 0 18 1 16 2 14 3 12 4 10 5 Refer to the table above which illustrates the demand curve for a monopolist.  Suppose the firm’s marginal cost is constant at $5. This monopolist will produce 

Options
A.4 units of output and charge a price of $12
B.5 units of output and charge a price of $10
C.3 units of output and charge a price of $14
D.2 units of output and charge a price of $16
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Step-by-Step Analysis
We start by identifying the given demand schedule as the monopolist's inverse demand: when Q = 0, P = 20; Q = 1, P = 18; Q = 2, P = 16; Q = 3, P = 14; Q = 4, P = 12; Q = 5, P = 10. This implies the price-quantity relation P = 20 ......Login to view full explanation

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