Use the following information to answer the following questions: The accompanyin

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?

Explanation / 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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