CA Foundation · Business Economics · Price Determination in Different Markets
A monopolist faces the linear demand curve P = 80 - 4Q. At what output is total revenue maximised?
Total revenue is maximised at Q = 10. With P = 80 - 4Q, TR = 80Q - 4Q², so MR = 80 - 8Q. Setting MR to zero gives Q = 10, where TR reaches ₹400, its highest value.
- AQ = 20
- BQ = 5
- CQ = 10Correct
- DQ = 40
Explanation
TR = P×Q = 80Q - 4Q². MR = 80 - 8Q. TR is maximum where MR = 0, so Q = 10. Check: TR at 10 = 800 - 400 = ₹400, higher than at 9 (720-324=396) or 11 (880-484=396). Q = 20 is where price is zero.
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