Use the following information to answer the following questions: The accompanyin
ID: 1128497 • Letter: U
Question
Use the following information to answer the following questions: The accompanying figure depicts the demand (D) curve for general admission concert tickets to see ECON-Jammin’, the world’s first economics rock band, which is scheduled to visit your city next month. The concert venue can accommodate 100 fans with a marginal cost (MC) of $10 per person.
If ECON-Jammin’ charges a single price to see the band in concert and follows the profit-maximizing rule for a monopoly, how many people will attend the concert?
50 Price $50 $30--1--+-- $20--+ MC MR 0 10 20 30 40 50 60 QuantityExplanation / Answer
The profit max condition is satisfied at MR=MC. That is, the point where additional revenue generated equals the cost incurred on it. Thus the correct option should be 20 people where MR intersects the MC curve.
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