Multiple choice

A monopoly firm faces a demand curve q = 200 - 100p. If the firm wants to maximise total revenue, then output is

  1. 50

  2. 100

  3. 150

  4. 200
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Total revenue TR = p × q. From demand q = 200 - 100p, we get p = 2 - q/100. TR = (2 - q/100) × q = 2q - q²/100. Maximum occurs at d(TR)/dq = 2 - q/50 = 0, so q = 100. At this point, marginal revenue is zero.

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