Price

The market price depends on the quantity that the monopoly produces.

Example

Zoe is the only lemonade seller on her street. People who drive home stop by to purchase liters of her lemonade.

The price for lemonade follows $$P = 10 - 2 Q$$

If Zoe produces Q=2 liters of lemonade, the price is $6: $$P = 10 - 2 Q = 10 - 2 \times 2 = 10 - 4 = 6$$

Question

The price for lemonade follows $$P = 56 - 10 Q$$ At what price will Zoe sell `Q=4` liters of lemonades?

Plug `Q=4` into `P = 56 - 10 Q` \begin{align*} P &= 56 - 10 Q \\ P &= 56 - 10 \times 4 \\ P &= 56 - 40 \\ P &= 16 \end{align*} The price of a liter of lemonade is $16.