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(Solution Library) a) You are the manager of a monopoly that faces a demand curve described by P = 85-5Q. The corresponding marginal revenue is given by MR =

Question: a) You are the manager of a monopoly that faces a demand curve described by P = 85-5Q. The corresponding marginal revenue is given by MR = 85 – 10Q. Your costs are C = 20 + 15Q and the marginal cost of production is $15 per unit.

  1. What are the profit maximizing price and output?
  2. What is the monopoly profit?

b) Compare your answers found in part a) with profit maximizing quantity, price and output if the underlying market structure were perfect competition.

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