2.4 The first two columns of the table show a monopoly’s marginal revenue, and the last two columns show its marginal cost.

a. What is the firm’s profit-maximizing quantity?

b. Assume that the marginal revenue and marginal cost curves are linear. Draw them in a diagram. Draw the firm’s demand curve in the diagram. (Hint: Recall that the demand curve and the marginal revenue curve have the same vertical intercept and the slope of the marginal revenue curve is twice that of the demand curve.) What is the firm’s profitmaximizing price?

Transcribed Image Text:

Marginal Revenue, Quantity, Marginal Quantity, Q Cost, TC Q MR $14.00 10 $8.00 10 13.00 11 8.50 11 12.00 12 9.00 12 11.00 13 9.50 13 10.00 14 10.00 14 8.00 15 10.50 15 8.00 16 11.00 16