Suppose that a firm faces a demand curve for its product of $P = 10 - Q ^ { d }$ . The corresponding marginal revenue curve is $M R = 10 - 2 Q$ . The firm has a constant marginal cost of $4 per unit. If the firm engages in uniform pricing, what price will the firm charge?
A) $7.
B) $5.
C) $4.
D) $3.

Question

Quizplus · Accepted Answer

To find the profit-maximizing price, set marginal revenue (MR) equal to marginal cost (MC). Here, $MR = 10 - 2Q$ and $MC = 4$. Solving $10 - 2Q = 4$ gives $Q = 3$. Substitute $Q = 3$ into the demand curve $P = 10 - Q$ to find the price: $P = 10 - 3 = 7$.

Suppose That a Firm Faces a Demand Curve for Its P=10−QdP = 10 - Q ^ { d }P=10−Qd

Suppose That a Firm Faces a Demand Curve for Its $P = 10 - Q ^ { d }$