the premium added to the risk-free rate that reflects the average sustained increase in the general level of prices for goods and services expected over the security's entire life
Consider a market with an inverse demand function that is linear: P = 46 - 2Q. The cost at the wholesale level is 0 for each unit produced. At the retail level, there is a cost of $6 associated with retailing each unit purchased at wholesale. Thus, the average cost for both levels combined is also $6. Find the optimal output and retail price for a vertically integrated monopolist, either using a graph or calculus. Illustrate answer with graph.