A monopolist faces a demand curve given by Q = 70-P. The monopolistis marginal revenue function is given by M R = 70 -2Q. a. If the monopolist can produce at constant average and marginal costs of AC = MC = 6, what output level will the monopolist choose in order to maximize profits? What is the price at this output level? What are the monopolistis profits? b. Assume instead that the monopolist has a cost structure where total costs are described by T C = .25Q^2- 5Q + 300 and marginal cost is given by M C = .5Q- 5. With monopolist facing the same market demand and marginal revenue, what price-quantity combination will be chosen now to maximize proÖts? What will proÖts be?
A monopolist faces a demand curve given by Q = 70-P. The monopolistis marginal revenue function is given by M R = 70 -2Q. a. If the monopolist can produce at constant average and marginal costs of AC = MC = 6, what output level will the monopolist choose in order to maximize profits? What is the price at this output level? What are the monopolistis profits? b. Assume instead that the monopolist has a cost structure where total costs are described by T C = .25Q^2- 5Q + 300 and marginal cost is given by M C = .5Q- 5. With monopolist facing the same market demand and marginal revenue, what price-quantity combination will be chosen now to maximize proÖts? What will proÖts be?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter9: Monopoly
Section: Chapter Questions
Problem 7SQ
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A monopolist faces a
a. If the monopolist can produce at constant average and marginal costs of AC = MC = 6, what output level will the monopolist choose in order to maximize profits? What is the price at this output level? What are the monopolistis profits?
b. Assume instead that the monopolist has a cost structure where total costs are described by T C = .25Q^2- 5Q + 300 and marginal cost is given by M C = .5Q- 5. With monopolist facing the same market demand and marginal revenue, what price-quantity combination will be chosen now to maximize proÖts? What will proÖts be?
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