2. A fim is a monopolistic producer of two goods G, and G2. The prices are related to quantities Q1 and Qz according to the demand equations Q1 = 50 – P, 202 = 90 – P2 If the total cost function is TC = Q + 2Q,Q2 + Q? a) Find an expression for the firm's profit b) Find the values of Q1 and Q2 which maximises profit by applying first and second order conditions and then the corresponding prices. c) Find the maximum profit and deduce the prices that maximises profit

2. A fim is a monopolistic producer of two goods G, and G2. The prices are related to quantities Q1 and Qz according to the demand equations Q1 = 50 – P, 202 = 90 – P2 If the total cost function is TC = Q + 2Q,Q2 + Q? a) Find an expression for the firm's profit b) Find the values of Q1 and Q2 which maximises profit by applying first and second order conditions and then the corresponding prices. c) Find the maximum profit and deduce the prices that maximises profit

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.5P

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Study Tools ins ess Tips ss Tips PRICE (Dellars per engine) 288 RSS #RR 100 50 30 20 10 MO 0 0 10 ATC MR Demand 20 30 40 50 70 DO 90 QUANTITY (Thousands of engines) 100 Mon Comp Outcome Min Unt Cost Decause this market is a monopolistically competitive market, you can tell that it is in long-run equilibrum by the fact that optimal quantity. Furthermore, a monopolistically competitive firm's average total cost in long-run equilibrium is average total cost. at the the minimum
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