Question: Suppose the demand for a new technology, on which the manufacturer has a patent monopoly, is given by: 0.5Q(P,A) = (2002P)A^0.5 where Q is output

Suppose the demand for a new technology, on which the manufacturer has a patent monopoly, is given by:

0.5Q(P,A) = (2002P)A^0.5

where Q is output per period, P is the price, and A is the current period promotional expenditures.

Production costs are given by: C(Q) = 40Q

Calculate the profit-maximising price, advertising level, and profits for the firm.

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