You are the manager of a monopoly firm with (inverse)demand given by P = 50 − 0.5Q.Your firm's cost function is C = 40 + 5Q².Your firm's marginal revenue is: A) P = 50 − 0.5Q. B) P = 100 − Q. C) P = 50 − Q. D) There is insufficient information to determine the firm's marginal revenue.

Question

Quizplus · Accepted Answer

To find the marginal revenue (MR) function, we need to take the derivative of the inverse demand function:

P = 50 - 0.5Q 
MR = dTR/dQ = d(PQ)/dQ = P + Q(dP/dQ)

Substituting P = 50 - 0.5Q, we get:

MR = 50 - 0.5Q + Q(-0.5) 
MR = 50 - Q

Therefore, the answer is (C) P = 50 - Q.

You Are the Manager of a Monopoly Firm with (Inverse)demand