Answer to Question #108354 in Economics for Brightchrist Mmari

Question

Demand curve for an imperfect market is given as 100/(1+P)2 what price will the firm charge to maximize profit mc is equal to 2

Answer 1

For imperfect competition MR=MC; MR=(P*Q)'.

From the demand equation P= (100/Q)^1/2-1;

PQ'=(Q*((100/Q)^1/2-1)'=5/Q^1/2-1=2;

Q=(5/3)²; P=(100/(5/3)²)^1/2=5

So, P=5