Suppose a monopolist faces the demand curve ana cost curves

Suppose a monopolist faces the demand curve ana cost curves shown blo. 5 MC ATC Demand 0 MR 0 1023 Quantity FIGURE 10-5

Solution

It is C because the question asks about maximizing the Revenue, not the profit. When profit is concerned a single price monopolist will maximize at the point where the MR curve meets the MC curve.

When it comes to maximizing the revenue, a firm maximizes the revenue when the MR is zero. At quantity Q3 the marginal revenue of the firm is zero and hence the revenue will be the maximum. Beyond this point, the Revenue will start decreasing. The answer is \"C\".