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Microecnomics

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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?

  • Microecnomics -

    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.

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