Chapter 61, Problem 2MCQ

To determine

Calculation of monopolist’s total revenue.

Answer to Problem 2MCQ

(c) $240.

Explanation of Solution

The profit-maximizing level of output is 4 because marginal revenue and marginal cost intersect each other, at this level of output, the price charged by the monopolist is $60.

  $\begin{array}{c}\text{Total revenue = Price×Quantity}\\ \text{= \$60×4}\\ \text{= \$240}\end{array}$

Hence, option (c) is correct.

Economics Concept Introduction

Introduction:

There is a single seller and a large number of buyers in the monopolist market. Monopolist charge higher prices due to a lack of competition and information. Total revenue is the product of price and quantity sold in the market.