7. A monopoly firm faces a demand curve given by 2(P) = 40 – 2p. The firm has constant MC=$12. (A) Find the firm's marginal revenue and use this to find the firm's profit-maximizing output and price....

Extracted text: 7. A monopoly firm faces a demand curve given by 2(P) = 40 – 2p. The firm has constant MC=$12. (A) Find the firm's marginal revenue and use this to find the firm's profit-maximizing output and price. Draw a diagram. Hint: first figure out how express the firm's total revenue in terms of Q. Then if you know calculus, take the derivative of this expression with respect to Q to find marginal revenue. If you don't know calculus, recall that for a linear demand curve, (1) the slope of the marginal revenue curve is twice (in absolute value) the slope of the demand curve; and (2) the marginal revenue curve intersects the vertical (price) axis at the same point as the demand curve; and (3) the marginal revenue curve hits the quantity axis at half the distance of the demand curve. (B) Find the price elasticity of demand at the profit-maximizing output and price. Is demand elastic?