Assume the inverse demand function and the cost function for a monopolist's product are given by:
P=5-Q and C(Q)=3Q
1. Discuss how much output should it produce if the firm wishes to maximize total revenue?
2. What price should it charge if the firm wishes to maximize total revenue.
3. Determine the elasticity of demand for the firm's product at the revenue maximizing level of output and price.
4. How much output should it produce if the firm wishes to maximize profits.
5. What price should it charge if the firm wishes to maximize profits.
6. Calculate the firm's maximum profits?