Scenario 16-3
Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q.
-Refer to Scenario 16-3.If the marginal cost of producing this good is 0,what price would a profit-maximizing monopolist charge for the product?

Question

Quizplus · Accepted Answer

A profit-maximizing monopolist sets marginal revenue (MR) equal to marginal cost (MC). Given MR = 20 - 2Q and MC = 0, setting MR = MC gives 20 - 2Q = 0, solving for Q gives Q = 10. Substituting Q = 10 into the demand equation P = 20 - Q gives P = 10.

Scenario 16-3 Suppose Market Demand for a Product Is Given by the by the Equation