You have a monopoly over the production and sale of "advil ". Your marketing team have estimated that the demand for Advil is as follows:

Q = 1,000,000 - 1,000 P

where Q is the quantity of Advil , and P is the price of an Advil in dollars.

Your engineers have estimated that the production will need an initial set-up costs of $30 million and marginal costs of production of $400 per pill.

1. Based on this information, what price should you charge and what quantity should you produce and sell? Explain

2. What is the elasticity of demand at this price and quantity?