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profit maximizing price

In a monopoly with a 50-50 chance of a demand curve of P=20-Q or P=40-Q and MC=Q, what is the profit maximizing price. Please show the steps to find either $5, 10, 15, or 20.

Solution Preview

For P = 20 - Q, MR = 20 - 2Q
Profit is maximized at MR = MC, which is 20 - 2Q = Q, or 3Q = 20, ...

Solution Summary

Show steps to find the profit maximizing price.

$2.19