A risk-neutral monopoly must set output before it knows the market price. There is a 50 percent chance the firm's demand curve will be P = 40 ? Q and a 50 percent chance it will be P = 60 ? Q. The marginal cost of the firm is MC = 3Q. What is the expression for the expected marginal revenue function?
A. E(MR) = 30 ? 2Q
B. E(MR) = 50 ? 2Q
C. E(MR) = 60 ? 2Q
D. E(MR) = 40 ? 2Q
Answer: B
Economics
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