2.7 Your marketing research department has estimated the demand foryour firm's product to beQ=10,000 100Pand the marginal revenue to beMR 100 .02Q=If marginal cost and average total cost are constant at $40,1. How much would you produce? The quantity you should produce is3,000 units2. What price would you charge? I would charge $703. How much economic profit would your firm earn? $90,0004. Illustrate your answers to parts a through c in a diagram.

This can be defined as a cost that shows the type of cost that an individual, business, or any other…

2.7 Your marketing research department has estimated the demand for your firm's product to be Q=10,000 100P and the marginal revenue to be MR = 100 - .02Q If marginal cost and average total cost are constant at $40,

2.7 Your marketing research department has estimated the demand for your firm's product to be Q=10,000 100P and the marginal revenue to be MR = 100 - .02Q If marginal cost and average total cost are constant at $40,

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Monopoly

Section: Chapter Questions

Problem 3PA

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Question

2.7 Your marketing research department has estimated the demand for
your firm's product to be
Q=10,000 100P
and the marginal revenue to be
MR 100 .02Q
=
If marginal cost and average total cost are constant at $40,
1. How much would you produce? The quantity you should produce is
3,000 units
2. What price would you charge? I would charge $70
3. How much economic profit would your firm earn? $90,000
4. Illustrate your answers to parts a through c in a diagram.

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Step 1: Define Marginal cost.

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Step 2: Calculate quantity and price.

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Step 3: Draw the diagram:

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