Yongling is a monopoly seller of a good in a town. She has a fixed supply of 8 units and no other costs. The market demand curve for the product is P = 20–q. What is her profit if she sells to all her clients at the same price? Group of answer choices$24$36$72$48$96
Question
Yongling is a monopoly seller of a good in a town. She has a fixed supply of 8 units and no other costs. The market demand curve for the product is P = 20–q. What is her profit if she sells to all her clients at the same price? Group of answer choices3648$96
Solution
To solve this problem, we need to find the price at which Yongling can sell all her 8 units. We can do this by setting q (quantity) equal to 8 in the demand equation P = 20 - q.
Step 1: Substitute q = 8 into the equation. P = 20 - 8 = 12
So, Yongling can sell each unit for $12.
Step 2: Calculate total revenue. Total revenue = Price * Quantity = 96
Since Yongling has no other costs, her total revenue is also her profit.
So, her profit if she sells to all her clients at the same price is $96.
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