Suppose a certain city has a monopoly cable-television company. This company has total costs TC = Q2 + 10Q + 75. (Hint: using calculus, this means MC = 2Q + 10 since MC is the derivative of TC with respect to output.) The demand in the community is approximated by the equation Qd = 85 - P/2 (alternatively, you can write the demand equation as Qd = 85 – 0.5P). Graphically depict the demand curve as well as the marginal cost (MC) curve.If the cable company is free to choose its own price Pm and quantity Qm, graphically depict the monopoly equilibrium price and quantity. Add any other curve(s) to your diagram that may be required to obtain this outcome.Compute and state the exact monopolist equilibrium price Pm and quantity Qm that you depicted graphically.

Business economics includes making decisions and allocating resources in the face of numerous…

Answered: Suppose a certain city has a monopoly…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4: Estimating Demand

Section: Chapter Questions

Problem 7E

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Suppose a certain city has a monopoly cable-television company. This company has total costs TC = Q² + 10Q + 75. (Hint: using calculus, this means MC = 2Q + 10 since MC is the derivative of TC with respect to output.)

The demand in the community is approximated by the equation Q_d = 85 - P/2 (alternatively, you can write the demand equation as Q_d = 85 – 0.5P).

Graphically depict the demand curve as well as the marginal cost (MC) curve.
If the cable company is free to choose its own price P_m and quantity Q_m, graphically depict the monopoly equilibrium price and quantity. Add any other curve(s) to your diagram that may be required to obtain this outcome.
Compute and state the exact monopolist equilibrium price P_m and quantity Q_m that you depicted graphically.

Definition Video Definition Point where the demand and supply curves intersect. At the equilibrium price the quantity supplied of a good is equal to the quantity demanded. When the market is not in equilibrium, market surplus or market shortage occurs. The region that is above the price equilibrium indicates market surplus and the region below the price equilibrium indicates market shortage. Video

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