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a) A monopoly faces a demand curve given by P = 2,500 - 0.5Q and has...

a) A monopoly faces a demand curve given by P = 2,500 - 0.5Q and has marginal cost constant at $200. What is the profit-maximizing output level?

b) A monopoly faces a demand curve given by P = 2,500 - 0.5Q and has marginal cost constant at $100. What is the profit-maximizing price?

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Answer #2

a) We are given P = 2,500 - 0.5Q, this is the Average revenue, we need to find the total revenue and marginal revenue:

Now profit maximizing output will be where MR = MC

b) We are given P = 2,500 - 0.5Q, this is the Average revenue, we need to find the total revenue and marginal revenue:

Now profit maximizing output will be where MR = MC

answered by: anonymous
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