Posted by G on Thursday, October 16, 2008 at 11:14am.
I would go with A.
Draw a typical monopoly model, with a demand curve and a marginal revenue curve. Draw a MC curve. At the optimal Q, What is the price (aka Average revenue)? What is the MR value?
BTW, with linear-drawn demand and MR "curves", Revenue is maximized when MR is zero. However, this is not the optimal profit point (unless MC
I would go with A.
Draw a typical monopoly model, with a demand curve and a marginal revenue curve. Draw a MC curve. At the optimal Q, What is the price (aka Average revenue)? What is the MR value?
BTW, with linear-drawn demand and MR "curves", Revenue is maximized when MR is zero. However, this is not the optimal profit point (unless MC is zero also)
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