Answer to Question #185384 in Microeconomics for Emily Gellis

Question

Given the following information, what quantity is profit-maximizing for a Monopolist?  Explain your answer. 

Quantity

Marginal Revenue

Marginal Cost 

1

$162

$90

2

$142

$80

3

$122

$70

4

$102

$60

5

$82

$70

6

$62

$80

7

$42

$90

Answer 1

5 quantities

The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC, but since that isn't available, the closest is 5 quantities with the range being $12.