Question: Consider a monopolist using one input, xx , in the production process. For simplicity, assume the marginal product of xx is constant. The monopolist faces
Consider a monopolist using one input, xx in the production process. For simplicity, assume the marginal product of xx is constant.
The monopolist faces a linear demand given by
QPQP
where PP stands for the price and QQ stands for the quantity demanded.
Suppose the monopolist sells its product at a price of $ per unit.
The monopolist is maximizing profits, and the marginal revenue product of xx is: MRPxMRPx The marginal product of the input must be MPx
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