Question

1. Answer the following questions based on the demand curve: Q = 100 – 2P

1. Determine the maximum value of Total Revenue
2. Find the elasticity when revenue is maximized. Explain if you expected the answer.
3. Find the equation of total revenue in terms of ‘Q’

Will a monopolist ever produce at a price less than 25? Explain.

Answer 1

Q = 100- 2P TR = PO = P(100-2P) TR = loop - 2P² TB = 100 - up dP put dTR dP = 0 100 - 4P = 0 100= up P = 25 - = - 4 so so d824 P=25 is revenue max. price and a = 100 - 2/250 100 - 50 = 50 is revenue max. quantity may value of Revenue, TR = PO = 25x50 = 1250 Q = do dP 100 - 2P - 2 - price max. elasticity of demand at revenue price and quantity

- (-2)/25) = -1 50 1-1) = c) a = 100-2P 2P= 100-o P = 50 a TR = Po = (50-00 TR = 500 - 82 A monopolist always producer in the region. where elasticity is elantic or e l In our care a monopolist will produce when P7,25 But when price less than 25 i.e. P<25 exarticity tuans less than elartic i e es, which means MR will be – ne. Thus, monopolist wir not produce when P < 25.