A monopolist faces a market demand curve given by Q = 70 − P. a. What is the monopolist’s marginal revenue function? [Remember: the convention is that we write Rev(Q) and MR(Q). I.e., as a function of Q] b. Suppose the total cost is described by TC = 0.5Q^2 − 5Q + 100. What price-quantity combination will be chosen to maximize profits? c. What is the consumer surplus? What is the producer surplus?
A monopolist faces a market demand curve given by Q = 70 − P. a. What is the monopolist’s marginal revenue function? [Remember: the convention is that we write Rev(Q) and MR(Q). I.e., as a function of Q] b. Suppose the total cost is described by TC = 0.5Q^2 − 5Q + 100. What price-quantity combination will be chosen to maximize profits? c. What is the consumer surplus? What is the producer surplus?
Chapter8: Monopoly
Section: Chapter Questions
Problem 4SQ
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Question
A monopolist faces a market
a. What is the monopolist’s marginal revenue function? [Remember: the
convention is that we write Rev(Q) and MR(Q). I.e., as a function of Q]
b. Suppose the total cost is described by
TC = 0.5Q^2 − 5Q + 100.
What price-quantity combination will be chosen to maximize profits?
c. What is the
you can decide to count or not count the fixed cost TC(0) of producing nothing. Both are
fine.]
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