Suppose a monopolist faces the demand function 120.1Q. The corresponding marginal revenue function is 120.2Q. Further, suppose that marginal cost is constant at $3.

Set the marginal revenue function equal to marginal cost ($3), and then solve for Q. To find the profit maximizingprice, substitute the profit maximizing quantity into the demand function.

The profit maximizing quantity is

45

45, and the profit maximizing price is $

7.50

7.50.