You are the manager of a firm that sells its product in a monopolistically competitive with (inverse) demand given by P = 50 - 0.5Q.Your firm's cost function is C = 40 + 5Q².Your firm's marginal revenue is

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, the firm faces a downward-sloping demand curve. The marginal revenue (MR) curve is therefore below the demand curve. The formula for MR is: 
MR = P + Q(dP/dQ)
Substituting the given demand equation P = 50 - 0.5Q into the MR formula, we get:
MR = 50 - 0.5Q + Q(-0.5)
MR = 50 - 1.5Q
Therefore, the firm's marginal revenue is P = 50 - 1.5Q, which is equivalent to choice B.

You Are the Manager of a Firm That Sells Its