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Hair growing has the following demand curve P=101-0.00002Q where P is measured in dollars and Q in number of pills a year.

A/ Your marginal cost for producing a hair grow pill is $1. What is the profit maximizing quantity and what is your profit.

B/ Suppose your production facility can only produce 1,000,000 pills per year. What is your optimal price and quantity given the production constraint. What are your profits. (assuming there are no fixed costs).

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Solution Summary

Profit maximization monopoly is examined. The production facility is examined.

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A. profit max.

marginal cost = 1 => total cost = Q

revenue = PXQ - C X Q = (101-0.00002Q)Q -Q = 101Q ...

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