The equation of a firm's marginal revenue curve is estimated to be P = 50 ? Q (quantity), and the equations of their marginal cost curve is estimated to be P = 10 + 3Q. The profit-maximizing price for this firm is:
A) $5.
B) $10.
C) $15.
D) $50.
E) $40.

Question

Quizplus · Accepted Answer

To find the profit-maximizing price, set marginal revenue (MR) equal to marginal cost (MC). MR is given by P = 50 - Q, and MC is given by P = 10 + 3Q. Solving 50 - Q = 10 + 3Q gives Q = 10. Substitute Q = 10 into the MR equation to find the price: P = 50 - 10 = 40.

The Equation of a Firm's Marginal Revenue Curve Is Estimated