Explore BrainMass
Share

Monopoly Price and Profit-Maximizing Output

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Suppose that a monopoly faces an inverse market demand function:

P = 100-2Q

and its marginal cost function is:

MC = 40 - 2Q.

a. What should be the monopoly's profit-maximizing output?
b. What is the monopoly's price?

© BrainMass Inc. brainmass.com March 22, 2019, 12:38 am ad1c9bdddf
https://brainmass.com/economics/monopolies/monopoly-price-profit-maximizing-output-507580

Solution Preview

a) The monopoly maximizes its profit at the output quantity where Marginal Revenue (MR) = MC.

To find MR, ...

Solution Summary

Given only a monopolist's inverse market demand function and its marginal cost function, this solution shows how to find the monopolist's profit-maximizing price and output. All calculations are shown in full.

$2.19