The equation of a firm's marginal revenue curve is estimated to be P = 50 - Q (quantity),and the equation of its 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

The profit-maximizing price is found where marginal revenue equals marginal cost. Setting the two equations equal to each other, we get:50 - Q = 10 + 3Q4Q = 40Q = 10Substituting Q = 10 back into the marginal revenue equation, we get:P = 50 - QP = 50 - 10P = $40Therefore, the profit-maximizing price for this firm is $40.

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