A monopolist faces a demand curve $Q = 50 P ^ { - 4 }$ and that the monopolist has a constant marginal cost of 75. The monopolist's profit-maximizing price is

Question

Quizplus · Accepted Answer

To find the profit-maximizing price, set marginal revenue equal to marginal cost. First, derive the inverse demand function: $P = (Q/50)^{-1/4}$. Then, find the marginal revenue and set it equal to the marginal cost of 75. Solving this gives the price of 100.

A Monopolist Faces a Demand Curve Q=50P−4Q = 50 P ^ { - 4 }Q=50P−4

A Monopolist Faces a Demand Curve $Q = 50 P ^ { - 4 }$