Equilibrium Price and Output Calculation
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Suppose p = 20 - 2q and MR=20-4q is the market demand function for a local monopoly. the marginal cost is 2 q. the local monopoly tries to maximize its profits by equating mc = mr and charging a uniform price. what will be the equilibrium price and output? A) $6.33, 3.33 units; b) $6.33, 5 units; c) $13.33, 3.33 units; d) $10, 5 units.
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Solution Summary
This solution contains step-by-step calculations to determine variable number of units at different equilibrium prices.
Solution Preview
Answer: c) $13.33, 3.33 units
Explanation
It is given that,
MR = 20 - 4Q
MC = 2Q
For ...
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