Let a firm's demand be given by: Q=100-P. Let the firm's marginal cost be $2 per unit of production. Solve for the firm's marginal revenue equation and optimal output/price combination. If the firm sets prices using Cost-Plus pricing what is the % markup over cost at the optimal price you found above?© BrainMass Inc. brainmass.com October 10, 2019, 4:40 am ad1c9bdddf
To find Marginal Revenue (MR), first find Total Revenue (TR):
From the demand curve:
Q = 100 - P
Given a firm's demand equation and its marginal cost, this solution shows how to calculate the firm's marginal revenue equation and optimal output/price combination. It then shows how to calculate the firm's percent markup if it uses cost-plus pricing.