Share
Explore BrainMass

Finding profit maximizing output and price

FlicroSoft, a monopoly, is considering selling several units of a homogeneous product as a single package. A typical consumer's demand for the product is given by Qd = 50 - 0.25P, and the marginal cost of production is $120.
a. Determine the optimal number of units to put in a package.
b. How much should the firm charge for the package?

Solution Preview

Solution:

a. Determine the optimal number of units to put in a package.

Qd=50-0.25P
0.25P=50-Qd
P=200-4Qd
Assume that monopolist produces according ...

Solution Summary

Solution describes the steps for calculating profit maximizing output (number of units) and price for package in a monopoly environment.

$2.19