A monopolist faces the following average revenue (demand) curve:
Problem 1. (7 points)
A monopolist faces the following average revenue (demand) curve:
P = 300-0.3Q
and the monopolist's cost function is given by
C(Q) = 8000+0.3Q2
(a) Derive the monopolist's marginal revenue equation. (2 pts)
(b) Derive the monopolist's marginal cost equation. (1 pt)
(c) What level of output will the monopolist choose in order to maximize its profits? (2 pts)
(d) What price will the monopolist receive at the profit-maximizing level of output? (1 pt)
(e) Calculate the monopolist's profit when they produce at the profit-maximizing level. (1 pt)
Homework Answers
A monopolist faces a market demand curve given by
A monopolist faces a market demand curve given by Q=70-P a. If the monopolist can produce at constant average and marginal costs ofAC-MC-6, what output level will the monopolist choose to maximize profits? What is the price at this output level? What are the monopolist's profits? b. Assume instead that the monopolist has a cost structure where total costs are described by C(Q) = 0.25Q2 - 5Q + 300. With the monopolist facing the same market demand and marginal revenue, what price-quantity combination will be chosen now...
Scenario A: A monopolist faces the following demand curve, marginal revenue curve, total cost curve for...
Scenario A: A monopolist faces the following demand curve, marginal revenue curve, total cost curve for its product: Q=3500-5p MR= 250-Q TC=15Q MC=100 What level of output maximizes total revenue? What is the profit maximizing level of output? What is profit maximizing price? How much profit does the monopolist earn? Suppose that a tax of $10 for each unit produced is imposed by state government. What is the profit maximizing level of output
A: A monopolist faces the following demand curve, marginal revenue curve, total cost curve for its...
A: A monopolist faces the following demand curve, marginal revenue curve, total cost curve for its product: Q=3500-5p MR= 250-Q TC=15Q MC=100 What level of output maximizes total revenue? What is the profit-maximizing level of output? What is the profit-maximizing price? How much profit does the monopolist earn? Suppose that a tax of $10 for each unit produced is imposed by the state government. What is the profit-maximizing level of output?
Consider a monopolist with the following demand curve: P = 390-29. The monopolist faces MCM = ACM = 30 a) Solve the pro...
Consider a monopolist with the following demand curve: P = 390-29. The monopolist faces MCM = ACM = 30 a) Solve the profit maximizing level of monopoly output, price, and profits. b) Suppose a potential entrant is considering entering, but the monopolist has a cost advantage. The potential entrant faces costs MCPE = ACPE = 40. Assuming the monopolist continues to profit-maximize, solve for the residual demand curve for the entrant. Assume the potential entrant follows the Cournot assumption about...
A monopolist faces the following demand curve, marginal revenue curve, total cost curve for its product
Scenario A: A monopolist faces the following demand curve, marginal revenue curve, total cost curve for its product: Q=3500-5p MR= 250-Q TC=150 MC=100 What level of output maximizes total revenue? What is the profit maximizing level of output? What is profit maximizing price? How much profit does the monopolist earn? Suppose that a tax of $10 for each unit produced is imposed by state government. What is the profit maximizing level of output
a monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost...
a monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q=200-2P MR=100-Q TC=5Q MC=5 What level of output maximizes total revenue? A) 95 B) 0 C) 90 D)100 What is the profit maximizing level output? A)0 B)100 C)90 D)95 How much profit does the monopolist earn? A)4512.50 B)5.00 C)475.00 D)4987.50
5. A monopolist faces a demand curve P = 60 – 2Q and initially faces a...
5. A monopolist faces a demand curve P = 60 – 2Q and initially faces a constant marginal cost MC = 4. (a) Calculate the profit-maximizing monopoly quantity and price, and compute the monopolist's total rev- enue and profits at the optimal price. (b) Suppose that the monopolist's marginal cost in- creases to MC = 8. Verify that the monopolist's total revenue goes down. (c) Suppose that all firms in a perfectly competitive equilibrium had a constant marginal cost MC...
Suppose a monopolist faces the following demand curve: P=250-Q Marginal cost of production is constant and equal to $10,...
Suppose a monopolist faces the following demand curve: P=250-Q Marginal cost of production is constant and equal to $10, there are no fixed costs What is the monopolist's profit-maximizing level of output?
As long as the demand curve lies above the marginal revenue curve for a monopolist, at...
As long as the demand curve lies above the marginal revenue
curve for a monopolist, at its profit-maximizing output level, it
will charge a price for its product that is
Question7 2 pts As long as the demand curve lies above the marginal revenue curve for a monopolist, at its profit-maximizing output level, it will charge a price for its product that is O above total cost. below marginal cost. O above marginal cost. O above average total cost.
The table below shows the demand and cost data for a monopolist in a small town...
The table below shows the demand and cost data for a monopolist in a small town (a) Fill in the missing columns. (b) What output will the monopolist produce? (c) What price will the monopolist charge? (d) What total profit will the monopolist receive at the profit-maximizing level of output? (e) Draw the demand curve for the monopolist's product, the MR curve and the MC curve for the firm. You may draw it freehand and submit the photo. quantity price...
Scenario A: A monopolist faces the following demand curve, marginal revenue curve, total cost curve for its product: Q=3500-5p MR= 250-Q TC=15Q MC=100 What level of output maximizes total revenue? What is the profit maximizing level of output? What is profit maximizing price? How much profit does the monopolist earn? Suppose that a tax of $10 for each unit produced is imposed by state government. What is the profit maximizing level of output
Consider a monopolist with the following demand curve: P = 390-29. The monopolist faces MCM = ACM = 30 a) Solve the profit maximizing level of monopoly output, price, and profits. b) Suppose a potential entrant is considering entering, but the monopolist has a cost advantage. The potential entrant faces costs MCPE = ACPE = 40. Assuming the monopolist continues to profit-maximize, solve for the residual demand curve for the entrant. Assume the potential entrant follows the Cournot assumption about...
5. A monopolist faces a demand curve P = 60 – 2Q and initially faces a constant marginal cost MC = 4. (a) Calculate the profit-maximizing monopoly quantity and price, and compute the monopolist's total rev- enue and profits at the optimal price. (b) Suppose that the monopolist's marginal cost in- creases to MC = 8. Verify that the monopolist's total revenue goes down. (c) Suppose that all firms in a perfectly competitive equilibrium had a constant marginal cost MC...
As long as the demand curve lies above the marginal revenue
curve for a monopolist, at its profit-maximizing output level, it
will charge a price for its product that is
Question7 2 pts As long as the demand curve lies above the marginal revenue curve for a monopolist, at its profit-maximizing output level, it will charge a price for its product that is O above total cost. below marginal cost. O above marginal cost. O above average total cost.
The table below shows the demand and cost data for a monopolist in a small town (a) Fill in the missing columns. (b) What output will the monopolist produce? (c) What price will the monopolist charge? (d) What total profit will the monopolist receive at the profit-maximizing level of output? (e) Draw the demand curve for the monopolist's product, the MR curve and the MC curve for the firm. You may draw it freehand and submit the photo. quantity price...
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