Consider a monopolist facing the daily demand curve displayed
below. Use the line tool to draw the marginal revenue curve.
To refer to the graphing tutorial for this question type, please
click here
Part 2 (1 point)
See Hint
Suppose that the monopolist's cost function is given by ?(?)=4?c(y)=4y, where ?y stands for the amount of output produced daily. The firm's marginal cost equals $ _____ .
Part 3 (1 point)
See Hint
If the monopolist is a profit maximizer, the monopolist will produce and sell _____ units per day. (Round your answer to two decimals if necessary.)
Part 4 (1 point)
See Hint
If this is a profit-maximizing monopolist, the price per unit of the product will be $ _____ . (Round your answer to the nearest integer.)
The Demand Curve can be drawn as follows
(1400 - y) / 1400 = (0 - P) / (0 - 12)
or 1 - y/1400 = P / 1200
or 12 - 3/350*y = P
The marginal Revenue curve is
MR = 12 - 3/175y
The graph can be drawn as follows
Part 2:
Cost function is given by c(y) = 4y where y is the output
Marginal cost = d/dy (c(y)) = d/dy (4y) = 4
Suppose that the monopolist's cost function is given by ?(?)=4?c(y)=4y, where ?y stands for the amount of output produced daily. The firm's marginal cost equals $ 4
Part 3:
At profit maximization, MR = MC
or 12 - 3/175y = 4
or 3/175y = 8
or y = 466.67
So the monopolist will sell 466.67 units per day
If the monopolist is a profit maximizer, the monopolist will produce and sell 466.67 units per day.
Part 4:
The price of each unit at profit maximization is given as
P = 12 - 3/350*y = 12 - 3*466.67 / 350 = 8
If this is a profit-maximizing monopolist, the price per unit of the product will be $ 8
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Consider a monopolist facing the daily demand curve displayed below. Use the line tool to draw...
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who produces at a constant marginal cost of $8.00. Show all
work.
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