Assume the first year demand curve for a new drug Livehappy is given by Q=2000-P, where P is the price that the monopolistic firm charges in order to maximize its profit given by profit =P*Q. Given the linear demand function, we know that the price would be given by setting the Marginal revenue 2000-2P = Marginal cost. Assume that the cost of producing Livehappy is negligible and approximated to 0. What is the maximum profit generated by the company during the first year?

Assume the first year demand curve for a new drug Livehappy is given by Q=2000-P, where P is the price that the monopolistic firm charges in order to maximize its profit given by profit =P*Q. Given the linear demand function, we know that the price would be given by setting the Marginal revenue 2000-2P = Marginal cost. Assume that the cost of producing Livehappy is negligible and approximated to 0. What is the maximum profit generated by the company during the first year?

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Monopoly

Section: Chapter Questions

Problem 7SQP

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