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CA Foundation · Business Economics · Price Determination in Different Markets

A monopolist faces the linear demand curve P = 60 - 3Q. At which output is total revenue maximised, and what is the maximum total revenue?

Total revenue is maximised at Q = 10 with TR of ₹300. Setting MR = 60 - 6Q equal to zero gives Q = 10, where price is ₹30. At this point demand is unit elastic, and producing more would reduce total revenue.

  1. AQ = 10, TR = ₹300Correct
  2. BQ = 20, TR = ₹0
  3. CQ = 10, TR = ₹150
  4. DQ = 5, TR = ₹225

Explanation

TR = 60Q - 3Q², MR = 60 - 6Q. TR is maximum where MR = 0, so Q = 10. Price = 60 - 30 = ₹30, so TR = 30×10 = ₹300. Check: at Q = 5, TR = 5×45 = 225, which is lower. Q = 20 gives price zero, hence zero revenue.

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