Question: 1. 7. 2 A monopolys inverse demand function is p = 588 - 8Q + 4A0.5, where Q is its quantity, p is its price,

1. 7. 2 A monopoly’s inverse demand function is p = 588 -

8Q + 4A0.5, where Q is its quantity, p is its price, and A is its level of advertising. Its marginal cost of pro duction is 50, and its marginal cost of advertising is 1.

What is the firm’s profit function? Solve for the firm’s profit-maximizing quantity, level of advertising, and price. (Hint: See Solved Problem 12.4.) M

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