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If the inverse demand curve a monopoly faces is p = 170 - 2Q, and MC...

If the inverse demand curve a monopoly faces is p = 170 - 2Q, and MC is constant at 10, then profit maximization is achieved when the monopoly sets price equal to

A. 58.

C. 40.

B. 21.

D. 16.

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Answer #1

Answer: A. 58

profit maximization happens when the price is 58.

If p=58

58 = 170-2q

2Q= 170-58

q = 56

Revenue = 56*58 = 3248

Total marginalc cost = 56*10 = 560

Profit = 2688

If P = 40

40 = 170-2q

2q = 170-40

q = 65

Revenue = 40*65 = 2600

Total marginal cost = 650

Profit = 1950

If P=21

21 = 170-2q

2q = 170-21

q = 74.5

Revenue = 74.5*21 =1564.5

Total margial cost =210

Profit = 1354.5

If P = 16

16=170-2q

2q = 170-16

q = 77

Revenue = 77*16 = 1232

Total marginal cost = 160

Profit = 1072

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