The demand equation for a single price monopolist is P = 120 - 3Q. The marginal revenue curve for this monopolist is
A)120 - 1.5Q.
B)60 - 3Q.
C)60 - 6Q.
D)120 - 6Q.

Question

Quizplus · Accepted Answer

The formula for marginal revenue (MR) for a monopolist is MR = P(1 - 1/elasticity of demand). 
Using the demand equation P = 120 - 3Q, we can find the elasticity of demand: 
elasticity of demand = (dQ/Q)/(dP/P) = (-3/Q)/(120 - 3Q)/(Q) = -3(120 - 3Q)/(Q(120 - 3Q)) = -3/(40 - Q)

Plugging this elasticity into the formula for MR, we get: 
MR = (120 - 3Q)(1 - 1/(-3/(40-Q))) = (120 - 3Q)(1 + 40/(-3 + 40Q)) 
Simplifying, we get: 
MR = 120 - 6Q

Therefore, the marginal revenue curve for this monopolist is D, 120 - 6Q.

The Demand Equation for a Single Price Monopolist Is P