A monopolist can produce at a constant marginal cost of $5 and a fixed cost of $55. It faces a market demand curve given by Q = 24- P/4. Demand: Q = 24 - P/4 Inverse Demand: P = 96-4Q Total Revenue (TR) = 96Q-4Q^2 Marginal Revenue (MR) = 96 - 8Q Marginal Cost (MC) = 5 Profit maximizing quantity of monopolist= 11.375 Profit maximizing price of monopolist= $50.5 Profit of monopolist= $ 517.5625 Suppose a competitive firm has the same constant marginal cost of £5. Find the profit maximising output for this firm. What is the price that the competitive firm must charge? The government decides to impose a new policy on this monopolist. In particular, the government wants to introduce price regulation such that the regulated price will consequently make this monopolist earns zero profit only. What is the regulated price that this monopolist should charge? How many quantities of output are produced with this new regulated price?
A monopolist can produce at a constant marginal cost of $5 and a fixed cost of $55. It faces a market demand curve given by Q = 24- P/4. Demand: Q = 24 - P/4 Inverse Demand: P = 96-4Q Total Revenue (TR) = 96Q-4Q^2 Marginal Revenue (MR) = 96 - 8Q Marginal Cost (MC) = 5 Profit maximizing quantity of monopolist= 11.375 Profit maximizing price of monopolist= $50.5 Profit of monopolist= $ 517.5625 Suppose a competitive firm has the same constant marginal cost of £5. Find the profit maximising output for this firm. What is the price that the competitive firm must charge? The government decides to impose a new policy on this monopolist. In particular, the government wants to introduce price regulation such that the regulated price will consequently make this monopolist earns zero profit only. What is the regulated price that this monopolist should charge? How many quantities of output are produced with this new regulated price?
Chapter8: Monopoly
Section: Chapter Questions
Problem 15SQ
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Question
A monopolist can produce at a constant marginal cost of $5 and a fixed cost of $55. It faces a market demand curve given by Q = 24- P/4.
Demand: Q = 24 - P/4
Inverse Demand: P = 96-4Q
Total Revenue (TR) = 96Q-4Q^2
Marginal Revenue (MR) = 96 - 8Q
Marginal Cost (MC) = 5
Profit maximizing quantity of monopolist= 11.375
Profit maximizing
Profit of monopolist= $ 517.5625
- Suppose a competitive firm has the same constant marginal cost of £5. Find the profit maximising output for this firm. What is the price that the competitive firm must charge?
- The government decides to impose a new policy on this monopolist. In particular, the government wants to introduce price regulation such that the regulated price will consequently make this monopolist earns zero profit only. What is the regulated price that this monopolist should charge? How many quantities of output are produced with this new regulated price?
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