Question: A risk - neutral monopoly must set output before it knows the market price. There is a 5 0 percent chance the firm's demand curve

A risk-neutral monopoly must set output before it knows the market price. There is a50 percent chance the firm's demand curve will be P =20- Q and a 50 percentchance it will be P =40- Q. The marginal cost of the firm is MC = Q. The profits aremaximized in the expected sense when: Expected value of price = E(MR). MC < E(MR).O MC = E(MR). MC = Expected value of price.

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