A monopoly s marginal cost equation is MC 5Q an... - SS2 Economics Price And Quantity Determination Under Monopoly Question
A monopoly's marginal cost equation is MC = 5Q, and its marginal revenue equation is MR = 50 - 2Q. What quantity of goods will the monopoly produce, and what price will it charge?
Setting MC equal to MR to determine the quantity:
5Q = 50 - 2Q
Solving for Q, we get:
7Q = 50
Q = 7.14
To determine the price, we need to substitute the quantity back into the MR equation:
MR = 50 - 2Q
MR = 50 - 2(7.14)
MR = 35.72
Thus, the monopoly will charge a price of $35.72 per unit andl produce 7.14 units of goods.
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