Question: Suppose the following direct demand function for a price setting firm: Q = 4 0 0 - 4 0 P Assume that this firms goal

Suppose the following direct demand function for a price setting firm: Q

= 400 - 40

P Assume that this firms goal is to maximize total revenue. Find the revenue maximizing price and quantity. You are expected to solve the maximization problem to come up with these values. b

.

Draw in the top graph, the firms inverse demand curve and marginal revenue curve. Label the Demand curve and the MR curve. Label appropriately the vertical axis and horizontal axis. Also, label the revenue maximizing price and quantity on your graph

(

numerical values

) .

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