A monopolist faces a demand curve given by P = 10 - Q and has a constant marginal (and average)...

The correct answer is b. $12.

The total revenue and marginal revenue functions are:

{eq}\begin{align*} TR &= PQ\\ &= 10Q - {Q^2}\\ MR &= \dfrac{{\partial TR}}{{\partial Q}}\\ &= 10 - 2Q \end{align*} {/eq}

The profit maximizing price and quantity are determined below:

{eq}\begin{align*} MR &= MC\\ 10 - 2Q &= 2\\ Q &= 4\,{\rm{units}}\\ P &= \$ 6 \end{align*} {/eq}

The economic profit generated by the monopolist is:

{eq}\begin{align*} \pi &= TR - TC\\ &= \left( {6 \times 4} \right) - \left( {6 \times 2} \right)\\ &= \$ 12 \end{align*} {/eq}