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2 March, 05:15

The demand and marginal cost equations below represent those faced by a monopolist in the market for lunar exploratory vehicles. D: Qd = (minus 1/2) P + 10,000 MC: MC = 2Q + 50 What equation best represents the firm's marginal revenue?

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  1. 2 March, 05:46
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    MR = - P + 10,000

    Explanation:

    Qd = (-1/2) P + 10,000 ... (1)

    Total Revenue = TR = P. Qd = P[ (-1/2) P + 10,000]

    TR = P[ (-1/2) P + 10,000) ] = (-1/2) P^2 + 10,000P ... (2)

    To obtain MR, equation 2 is differentiated with respect P as follows:

    MR = TR' = - P + 10,000

    Therefore, the best equation to represent the firm's marginal revenue (MR) is MR = - P + 10,000.
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