Suppose a monopolist faces a market demand curve of the form: P 122 - 0.2Q. This...

Question

Question

Suppose a monopolist faces a market demand curve of the form: P 122 - 0.2Q. This monopolist has a total cost curve given by:

Answer 1

Answer #1

The monopolist maximizes his profits as follows:

(122 0.20)Q2Q 0-122 0.4Q 2-Q= 300

At this quantity, price is 62.

Consumer surplus at this price is 1/2 * 300 * (122 - 62) = 9000

Answer 2

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