A Risk Neutral Monopoly Must Set Output Before It Knows

question 63

Multiple Choice

A risk neutral monopoly must set output before it knows for sure the market price.There is a 50% chance the firm's demand curve will be P = 20 - Q and a 50% chance it will be P = 40 - Q.The marginal cost of the firm is MC = Q.The expected profit-maximizing price is:

• A)$5.
• B)$10.
• C)$15.
• D)$20.

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