A monopolist with a straight-line demand curve finds that it can sell 2 unit at 12...

A monopolist with a straight-line demand curve finds that it can sell 2 unit at 12 dollar each or 12 unit at 2 dollar each. Its marginal cost is constant at 3 dollar per unit. Draw the MR, and MC curves for this monoply

Expert Solution

Given the two points on the demand curve (2,12) and (12,2), we can find the demand equation as:

Q- 12 = (2-12)/(12-2) (P-2)

which gives P = 14 - Q

Total revenue = P. Q = (14-Q)Q = 14Q - Q^2

and MR = dTR/dQ = 14-2Q

Thus, the MR and MC curves are depicted graphically as follows:

Rahul Sunny answered 2 years ago

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