Question

Based on information given answer the questions below A monopolist has a demand curve given by P = 80 - 4Q and a total cost curve given by TC = 400. 5 The associated marginal cost curve is MC = 40. What is the monopolist's marginal revenue curve? a. MR = 70 - 4Q b. MR = 80 - 8Q c. MR = 70 - 80 d. MR = 56 - Q e. none of the above 6 And what is the monopolist's profit maximizing quantity? a. 5 b. 6 c. 18 d. 9 e. none of the above 7 And what price will the monopolist charge? a. 50 b. 60 c. 9 d. none of the above 8 And how much economic profit will the monopolist earn? a. 36 b. 100 c. 90 d. 162 e. none of the above

Answer 1

Q5
Answer
Option b

MR=80-8Q .......... An MR curve is a double sloped than an inverse linear demand curve
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Q6
The firm maximize profit at MR=MC level of output
80-8Q=40
8Q=40
Q=5 units

Option a
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Q7
Answer
P=80-4*5
P=$60

Option b
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Q8
Answer
option b
Economic profit =TR-TC
TR=P*Q=60*5=300
TC=40*5=200
Profit=300-200=100