Section 1

Now we have all the formulas we need to calculate the monopolist's profit maximizing price and output, along with monopoly profits. Step One: Set marginal revenue equal to marginal cost. (5) = (7) 100 – 2Q = 20 ... Verify that this is a local maximum by checking to see if the second-order derivative is negative. Since -2 is negative, 40 is a ... ................
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