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    Finding profit maximizing output and price

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    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?

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    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