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Your consulting firm was just granted an exclusive contract for your state. You now must decide your pricing policy, given the following relationships:
P = $1400 - 0.0004Q MR = $1400 - 0.0008Q AVC = $1000
P = $1400 - 0.0004Q
MR = $1400 - 0.0008Q
AVC = $1000
where P is the price, Q the quantity, and AVC the average variable cost.
The firm will encounter no fixed costs, and all revenue is after taxes. As your firm has been granted an exclusive contract, your pricing and output decisions will be those of a monopolist.
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