Scenario 10.3:
The demand curve and marginal revenue curve for red herrings are given as follows:
Q = 250 - 5P
MR = 50 - 0.4Q
-Refer to Scenario 10.3. At the profit-maximizing level of output, demand is:

Question

Quizplus · Accepted Answer

At the profit-maximizing level of output, the marginal revenue (MR) is positive but decreasing. This corresponds to the elastic portion of the demand curve, where a decrease in price leads to a more than proportional increase in quantity demanded. However, it is not infinitely elastic because that would imply a horizontal demand curve (MR would be constant), which is not the case here given the MR equation.

Scenario 10.3: The Demand Curve and Marginal Revenue Curve for Red Herrings