11.2. A monopolist faces a market demand curve given by Q3D 70 — Р. The monopolisťs marginal revenue function is given by MR = 70 – 2Q. a. If the monopolist can produce at constant average and marginal costs of AC = MC = 6, what out put level will the monopolist choose in order to maxi- mize 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 TC = 0.25Q² – 5Q+300 and marginal cost is given by МС 3 0.5Q — 5. With the monopolist facing the same market demand and marginal revenue, what price-quantity combination will be chosen now to maximize profits? What will profits be? c. Assume now that a third cost structure explains the monopolist's position, with total costs given by 11 TC = 0.01Q³ – Q² + 45Q+ 100 and marginal costs given by MC = 0.03Q² – 2Q+45. Again, calculate the monopolisť's price-quantity combination that maximizes profits. What will profits be? (Hint: set MC = MR as usual and use the quadratic formula or simple factoring to solve the equation for Q.)

11.2. A monopolist faces a market demand curve given by Q3D 70 — Р. The monopolisťs marginal revenue function is given by MR = 70 – 2Q. a. If the monopolist can produce at constant average and marginal costs of AC = MC = 6, what out put level will the monopolist choose in order to maxi- mize 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 TC = 0.25Q² – 5Q+300 and marginal cost is given by МС 3 0.5Q — 5. With the monopolist facing the same market demand and marginal revenue, what price-quantity combination will be chosen now to maximize profits? What will profits be? c. Assume now that a third cost structure explains the monopolist's position, with total costs given by 11 TC = 0.01Q³ – Q² + 45Q+ 100 and marginal costs given by MC = 0.03Q² – 2Q+45. Again, calculate the monopolisť's price-quantity combination that maximizes profits. What will profits be? (Hint: set MC = MR as usual and use the quadratic formula or simple factoring to solve the equation for Q.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3
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