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Question

The demand curve for a monopoly firm is p= 80-0.5q. If the MC is constant at Rs 10, find the profit-maximizing level of output.


A

35

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B

50

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C

70

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D

80

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Solution

The correct option is C

70


Given that demand curve is p= 80-0.5 q
The slope of demand curve = 0.5
Slope of MR curve = 2 × 0.5= 1

The equation of the MR curve is MR = 80-q
Equating MR=MC, we get 80 -q = 10
Hence, the profit-maximizing output is 70


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