Homework Answers
22. d
(Equilibrium price will equal competitive firm so that P = MC.
Thus, if MC increases, P will also increase in case of homogenous
good.)
21. b. 120
Monopolist maximizes profit where MR = MC.
Q = 300 - 3P
So, 3P = 300 - Q
So, P = 300/3 - Q/3 = 100 - Q/3
So, TR = P*Q = (100 - Q/3)*Q = 100Q - Q2/3
So, MR = d(TR)/dQ = 100 - 2Q/3
TC = 1000 + 15Q + 5Q = 1000 + 20Q
So, MC = d(TC)/dQ = 20
Now, MR = MC gives,
100 - 2Q/3 = 20
So, 2Q/3 = 100 - 20 = 80
So, Q = 80*(3/2) = 120)
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