Question
A firm is a monopolist in the production of a fuel sensor system. It faces monthly market demand that varies according to the equatioin Q=310-0.25P, where P is the price per system in dollars. The firm earns Marginal revenue accordind to the equation MR=1240-8Q & incurs marginal costs according to the function MC=140+2Q, where Q is the quantity of these systems produced.
A. How many of these Systems will the firm produce per month to Maximize profit? What price will the firm charge per system?
A. How many of these Systems will the firm produce per month to Maximize profit? What price will the firm charge per system?
Answers
economyst
Always always always. Maximize where MC=MR. You are given both equations. Use algebra and solve for Q. Plug this optimal Q into the demand equation to get P.