Price And Quantity Determination Under Monopoly - SS2 Economics Past Questions and Answers - page 1

(Marginal cost. A monopoly will produce and sell the quantity of goods where the marginal cost equals the marginal revenue, as this is the point where the company's profits are maximised)

(The price is higher and the quantity is lower because under a monopoly, the price of the product or service is generally higher than it would be under perfect competition, and the quantity produced is generally lower.)

(Inefficiencies in the market and a reduction in overall economic welfare. To s is because the price of the product or service is generally higher than it would be under perfect competition)

The monopoly produces the quantity of goods where marginal cost equals marginal revenue.

The monopoly finds the point on the demand curve where the quantity produced intersects, and this is the price that consumers are willing to pay for that quantity of goods.

Setting MC equal to MR to determine the quantity:

5Q = 50 - 2Q

Solving for Q, we get:

7Q = 50

Q = 7.14 

To determine the price, we need to substitute the quantity back into the MR equation:

MR = 50 - 2Q

MR = 50 - 2(7.14)

MR = 35.72

Thus, the monopoly will charge a price of $35.72 per unit andl produce 7.14 units of goods.