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1. A monopoly firm with costs of C(Q) = 14Q and MC = 14 faces (inverse) demand P(Q) = 110 -0.08Q2 and has MR =

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1. A monopoly firm with costs of C(Q) = 14Q and MC = 14 faces (inverse) demand P(Q) = 110 -0.08Q2 and has MR = 110 - .24Q2. Grading: 3 pts for part (a). 3 pts for part (b). What is the firm's profit-maximizing price and quantity? MC = 14, so MR = MC at 110 - 0.24Q2 = 14. This is Q* = 20, which implies P* = 78. How much profit does the firm collect? R = 1560 and C = 280, so profit = 1280

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