Question

From the following table, determine numerically the best level of output for the monopolist hy (a) Total approach and (b) Marginal approach.

Answer 1

(a) Total Approach

The monopolist would be in equilibrium when he produces and sells 5 units of the commodity at the price of Rs. 12 per unit.

(b) Marginal Approach

The best level of output for the monopolist would be 4 units. At this output, both MR and MC are equal to price (Rs.8) and he is getting maximum profit of Rs. 6.