A firm is a profit-maximizing monopolist in the market of a patented computer software. As an economic analyst, you observe the following data: a) The monopoly’s price is set at $50 per copy. b) The monopoly’s total revenue is $300,000. c) The monopoly’s marginal cost at the profit-maximizing quantity is at $30 per copy. Based on the observed data, please determine the linear inverse demand function. Fill in the blanks. Suppose the inverse demand function is of the form where a, b are both positive constants, determine the value for a: 1 and b: 2 .
A firm is a profit-maximizing monopolist in the market of a patented computer software. As an economic analyst, you observe the following data: a) The monopoly’s price is set at $50 per copy. b) The monopoly’s total revenue is $300,000. c) The monopoly’s marginal cost at the profit-maximizing quantity is at $30 per copy. Based on the observed data, please determine the linear inverse demand function. Fill in the blanks. Suppose the inverse demand function is of the form where a, b are both positive constants, determine the value for a: 1 and b: 2 .
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.13P
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A firm is a profit-maximizing monopolist in the market of a patented computer software. As an economic analyst,
you observe the following data:
a) The
b) The monopoly’s total revenue is $300,000.
c) The monopoly’s marginal cost at the profit-maximizing quantity is at $30 per copy.
Based on the observed data, please determine the linear inverse
Fill in the blanks. Suppose the inverse demand function is of the form
where a, b are both positive constants, determine the value for a: 1 and b: 2 .
Hint: a should be an integer, the answer for b should round to four decimal places.
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