Consider a monopolist who faces the inverse demand function of p(y) = 200 – 10y with marginal revenue given by MR= 200 – 20y. In addition the cost function is given by c(y) = 20y²/2 so that the marginal cost is simply, MC = 20y. %3D a) Calculate the monopolists choice of output and the associated price and profit. b)At the monopolists level of output and price, (that is at y* and p*), calculate the consumers price elasticity of demand. Note the elasticity of demand is given by Ay p E = Дру
Consider a monopolist who faces the inverse demand function of p(y) = 200 – 10y with marginal revenue given by MR= 200 – 20y. In addition the cost function is given by c(y) = 20y²/2 so that the marginal cost is simply, MC = 20y. %3D a) Calculate the monopolists choice of output and the associated price and profit. b)At the monopolists level of output and price, (that is at y* and p*), calculate the consumers price elasticity of demand. Note the elasticity of demand is given by Ay p E = Дру
Chapter9: Monopoly
Section: Chapter Questions
Problem 13SQ
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