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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a. At what output rate and price does the monopolist operate? b. In equilibrium, approximately what is the firm’s total cost and total revenue? c. What is the firm’s economic profit or loss in equilibrium?
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