Consider a monopoly where the inverse demand for its product is given by P = 200 − 5Q.Based on this information,the marginal revenue function is:
A) MR(Q) = 400 − 2.5Q.
B) MR(Q) = 400 − 10Q.
C) MR(Q) = 200 − 10Q.
D) MR(Q) = 200 − 2.5Q.

Question

Quizplus · Accepted Answer

The formula for marginal revenue is given by:
MR(Q) = ∂TR(Q) / ∂Q
where TR(Q) is the total revenue function.
Total revenue is given by:
TR(Q) = P(Q) × Q
Substituting the given demand function P = 200 − 5Q, we get:
TR(Q) = (200 − 5Q) × Q
TR(Q) = 200Q − 5Q²
Differentiating with respect to Q, we get:
MR(Q) = 200 − 10Q
Therefore, the correct answer is C.

Consider a Monopoly Where the Inverse Demand for Its Product