Answer to Question #256224 in Microeconomics for Kay

Question #256224

A monopoly that faces a demand curve given by q= 1-P and has a constant marginal cost is 0.1 In this situation the monopoly’s profit maximizing output level is

Expert's answer

P = 1 - Q

MR = 1 - 2Q

MC = 0.1

MR = MC

1 - 2Q = 0.1

1 - 0.1 = 2Q

0.9 = 2Q

Q = 0.45

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