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A monopolist faces the inverse demand curve p = 64 - 2q. At what level of output is his total
revenue maximized?
The answer is 16,a hint given with the problem is max total revenue where mr=0. Please show
work.
Solution
Hi,
Demand curve = 64-2Q
Revenue = 64Q-2Q^2
differentiating w.r.t Q
MR = 64-4Q
Revenue is maimum at MR = 0
=> 64-4Q = 0
=> Q = 16
Hence, the revenue is maximized at 16 units

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A monopolist faces the inverse demand curve p = 64 - 2q. At what lev.pdf

  • 1. A monopolist faces the inverse demand curve p = 64 - 2q. At what level of output is his total revenue maximized? The answer is 16,a hint given with the problem is max total revenue where mr=0. Please show work. Solution Hi, Demand curve = 64-2Q Revenue = 64Q-2Q^2 differentiating w.r.t Q MR = 64-4Q Revenue is maimum at MR = 0 => 64-4Q = 0 => Q = 16 Hence, the revenue is maximized at 16 units