Answer: b) $22
Explanation:
A Monopoly will maximise output where Marginal Revenue equals Marginal cost.
Marginal revenue (MR) is the differential of Total revenue.
= (dTR/dQ ) 40Q - 0.25Q^2
= 40 - 0.5Q
Marginal Cost is the differential of Total cost.
= dTC/dQ
= 4
MR = MC
40 - 0.5Q = 4
36 = 0.5Q
Q = 72 units is the maximising quantity.
Price
Q = 160 - 4P
72 = 160 - 4P
4P = 160 -72
4P = 88
P = $22
