In order to maximize profits the quanity produced must be such that
marginal revenue is equal to marginal cost.
Economics MCQ - Economics Section 1
22
A monopolist faces the following demand and cost schedules:
| Output (units) | Price ($/unit) | Total Costs ($) |
| 0 | 5000 | 800 |
| 20 | 4800 | 20800 |
| 40 | 4600 | 64800 |
| 60 | 4400 | 122800 |
| 80 | 4200 | 244800 |
| 100 | 4000 | 350800 |
The optimal output level for this producer is closest to:
The optimal price level is 60 units because it produces the highest profit.
The profit maximizing choice is the level of output where marginal
revenue equals marginal cost.
When companies have similar market shares, competitive forces tend to
outweigh the benefits of collusion.
The economic profit will attract new entrants to the market and
encourage existing companies to expand capacity.
