11.16. Suppose a monopolist faces the market demand function P = a - bQ. Itsmarginal cost is given by MC = c + eQ. Assume that a > c and 2b + e > 0.a) Derive an expression for the monopolist's optimal quantity and price in terms of a, b,c, and e.

1.16. Suppose a monopolist faces the market demand function P = a - bQ. Its narginal cost is given by MC = c + eQ. Assume that a >c and 2b + e > 0. ) Derive an expression for the monopolist's optimal quantity and price in terms of a, b, =, and e.

1.16. Suppose a monopolist faces the market demand function P = a - bQ. Its narginal cost is given by MC = c + eQ. Assume that a >c and 2b + e > 0. ) Derive an expression for the monopolist's optimal quantity and price in terms of a, b, =, and e.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

11.16. Suppose a monopolist faces the market demand function P = a - bQ. Its
marginal cost is given by MC = c + eQ. Assume that a > c and 2b + e > 0.
a) Derive an expression for the monopolist's optimal quantity and price in terms of a, b,
c, and e.

Expert Solution

Step 1

Given

Inverse demand function

$P = a - b Q$ ... (1)

The marginal cost function of monopolist:

$M C = c + e Q$

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