Question: Suppose that a monopoly faces inverse market demand function as P = 70 -2Q, and its marginal cost function is MC = 40

Suppose that a monopoly faces inverse market demand function as

 

P = 70 -2Q,

 

and its marginal cost function is

MC = 40 – Q.

Please answer the following two questions:

a. What should be the monopoly’s profit-maximizing output?

b. What is the monopoly’s price?

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