Question

Barbara is a producer in a monopoly industry. Her demand​ curve, total revenue​ curve, marginal revenue​ curve, and total cost curve are given as​ follows: Q​ = 160minus4P TR​ = 40Qminus0.25Q2 MR​ = 40minus0.5Q TC​ = 4Q MC​ = 4 Refer to Scenario 1. The price of her product will be

A. ​$32.
B. ​$4.
C. ​$42.
D. ​$22.
E. ​$72.

Answer 1

D

Step-by-step explanation:

Profit is Maximize when MR = MC

since MR=40 - 0.5Q

and MC= 4

Therefore:

40-0.5Q = 4

-0.5Q = 4 - 40

-0.5Q= -36

divide through by -0.5

Q = 72

since Q = 72

from Q = 160 - 4p

72 = 160 - 4P

-4p = 72 - 160

-4P = -88

divide through by -4

P = 22