Question

2. A single-price monopoly faces an inverse demand curve of p = 2A –Q (where p=price, Q= quantity, A is an unknown positive constant), and a constant marginal cost of MC = $20. Assume we know that the profit-maximizing quantity Q* = 40. (a)What is the unknown constant "A" on the demand curve? Please draw the inverse demand curve in your analysis (p is on the vertical axis and Q on horizontal axis).

Answer 1

Answer:

$ 380

Step-by-step explanation:

Data:

The demand curve is given by the following:

$P = 2A - Q$

where A is unknown, marginal cost = $ 20

assuming the maximizing of profits from the plot, the expression would yield by interpolation = $ 380