Q1Alex Potter owns the only well in a town that produces clean drinking water. He faces the following demand P=100-Q, and marginal cost MC=20+2Q, marginal revenue MR= 100-2Q curves. In order to maximize profits, Alex should charge a price of $60 at the profit maximizing quantity with a marginal revenue equal to $60. $80 at the profit maximizing quantity with a marginal revenue equal to $60. $80 at the profit maximizing quantity with a marginal revenue equal to $80. $60 at the profit maximizing quantity with a marginal revenue equal to $80.

The firm would maximize the profits at the point, MR = MC where, MR is the Marginal Revenue MC is…

Answered: Alex Potter owns the only well in a…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Monopoly

Section: Chapter Questions

Problem 10PA

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Alex Potter owns the only well in a town that produces clean drinking water. He faces the following demand P=100-Q, and marginal cost MC=20+2Q, marginal revenue MR= 100-2Q curves. In order to maximize profits, Alex should charge a price of

		$60 at the profit maximizing quantity with a marginal revenue equal to $60.
		$80 at the profit maximizing quantity with a marginal revenue equal to $60.
		$80 at the profit maximizing quantity with a marginal revenue equal to $80.
		$60 at the profit maximizing quantity with a marginal revenue equal to $80.

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