00:01
So here we have a monopolist facing a demand curve of p equals 1 ,200 minus q.
00:06
Since the slope here is one, the curve starts at 1, which is what you get if you plug in q equal 0, and goes down to q equals 1 ,200, which is what you get at p equals 0.
00:18
Marginal revenue is 1 ,200 minus 2q, so it's got twice the slope, so it's going from 1 ,200 to 600, right? the monopolist rule of thumb here is to set marginal revenue equal to marginal cost, right? so we want to set the marginal revenue equals to the marginal cost.
00:42
So we have 1 ,200 minus 2q equals 0.
00:46
The marginal cost is just 0, so we get 1 ,200 equals 2q or q equals 600, right? so this turns out to be the optimal quantity, and at that optimal quantity, the price on the demand curve, right? the demand curve would be price equals 1 ,200 minus 600 equals 600...