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16 A monopoly faces the following average revenue (demand) curve: P = 240 - 0.040, where Q is the weekly production and P is
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Answer
$210
Here
Total revenue (TR) = Average revenue (AR) x Q
or (240-0.04Q)xQ = 240Q-0.04Q2
TR=240Q-0.04Q2
Differentiating both sides with respect to Q
MR=240-0.08Q

Here
TC=180Q-75,000
Differentiating both sides with respect to Q
MC=180
240-0.08Q=180
Q=750

The price in which it is being sold
240-0.04x750=210
The monopolists profit maximising quantity is when MR=MC

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