Answer:
a. $16.
Explanation:
the firm offer a price where marginal revenue = marginal cost
We have to solve at which quantity the price is $1.
There, the marginal revenue would match the marginal cost.
1 = 5 - 0.5q
q= (5 -1) /0.5 = 4/0.5 = 8
Now, we solve or the price at which quantity is zero:
p = 5 - 0.5(q) = 5 - 0 = 5
With that we can now solve for the consumer good as the area of the triangle above the marginal cost and below the demand function
(see attached graph)
8 x (5-1) / 2 = 16
