Question
The monopolist faces a demand curve given by $D(p)=100-2 p .$ Its cost function is $c(y)=2 y .$ What is its optimal level of output and price?
Step 1
Revenue is given by the product of price and quantity, so we have: R(p) = p * D(p) = p(100 - 2p) = 100p - 2p^2 Show more…
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The monopolist faces a demand curve given by D(p) = 100 - 2p. Its cost function is c(y) = 2y. What is its optimal level of output and price?
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