Given the demand schedule and marginal costs for a monopolist, at which quantity does the monopolist maximize profit?

• A. Where price equals marginal cost
• B. Where average cost equals average revenue
• C. Where total revenue is maximized
• D. Where marginal revenue equals marginal cost

Answer: (D)

Verified step by step guidance

1. Understand the monopolist's profit maximization condition: a monopolist maximizes profit where marginal revenue (MR) equals marginal cost (MC).
2. Recall that marginal revenue is the additional revenue gained from selling one more unit, and marginal cost is the additional cost of producing one more unit.
3. Given the demand schedule, calculate the marginal revenue for each quantity by finding the change in total revenue when quantity increases by one unit.
4. Compare the marginal revenue values to the marginal cost values at each quantity to identify the point where MR = MC.
5. The quantity at which MR equals MC is the profit-maximizing output level for the monopolist.