The bridge linking the island of Texas to Pottsville is a monopoly bridge owned by Pottsville Bridge Corporation. The hourly demand and total cost is given by the following: P= 200 - 2.0 Q TC= 40 Q where P is the price charged and Q is the number of cars crossing. 1) What price would maximize the monopolist's profits? Price Qty 2) How many bridge crossings would be purchased? That is, what is the profit- maximizing output? 3) What are the monopolist's profits at this price?
The bridge linking the island of Texas to Pottsville is a monopoly bridge owned by Pottsville Bridge Corporation. The hourly demand and total cost is given by the following: P= 200 - 2.0 Q TC= 40 Q where P is the price charged and Q is the number of cars crossing. 1) What price would maximize the monopolist's profits? Price Qty 2) How many bridge crossings would be purchased? That is, what is the profit- maximizing output? 3) What are the monopolist's profits at this price?
Chapter9: Monopoly
Section: Chapter Questions
Problem 7SQP
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Transcribed Image Text:The bridge linking the island of Texas to Pottsville is a monopoly bridge owned by Pottsville
Bridge Corporation. The hourly demand and total cost is given by the following:
P= 200 - 2.0 Q
TC= 40 Q
where P is the price charged and Q is the number of cars crossing.
1) What price would maximize the monopolist's profits?
Price
Qty
2) How many bridge crossings would be purchased? That is, what is the profit- maximizing
output?
3) What are the monopolist's profits at this price?
3) The government wishes to regulate the price that is charged. At what level should the price be
set to achieve the same number of bridge crossings as would be the case under perfect
competition?
4) What will be the number of bridge crossings at the regulated price?
6) What are the monopolist's profits in this situation?
$.
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