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21 February, 09:18

Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve, and total cost curve are given as follows: Q = 160minus4P TR = 40Qminus0.25Q2 MR = 40minus0.5Q TC = 4Q MC = 4 Refer to Scenario 1. The price of her product will be

A. $32.

B. $4.

C. $42.

D. $22.

E. $72.

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Answers (1)
  1. 21 February, 09:47
    0
    D

    Explanation:

    Profit is Maximize when MR = MC

    since MR=40 - 0.5Q

    and MC = 4

    Therefore:

    40-0.5Q = 4

    -0.5Q = 4 - 40

    -0.5Q = - 36

    divide through by - 0.5

    Q = 72

    since Q = 72

    from Q = 160 - 4p

    72 = 160 - 4P

    -4p = 72 - 160

    -4P = - 88

    divide through by - 4

    P = 22
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