A Firm's Demand Curve Is Given by P = 500

question 104

Essay

A firm's demand curve is given by P = 500 - 2Q. The firm's current price is $300 and the firm sells 100 units of output per week.
a. Calculate the firm's marginal revenue at the current price and quantity using the expression for marginal revenue that utilizes the price elasticity of demand.
b. Assuming that the firm's marginal cost is zero, is the firm maximizing profit?

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