Question: A risk-neutral monopoly must set output before it knows the market price. There is a 40 percent chance the firm's demand curve will be P

A risk-neutral monopoly must set output before it knows the market price. There is a 40 percent chance the firm's demand curve will be P = 40 2Q and a 60 percent chance it will be P = 80 2Q. The marginal cost of the firm is MC = 4. The expected profit is

  • $300.
  • $350.
  • $400.
  • $450.

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