3. (Monopolist) In a monopolist market, there is only one firm. In this regard, the monopolist is considered a "price maker," and sets price according to market demand. Suppose the demand curve for a monopolist's product is P(Q) = 100-Q and its total cost function is TC(Q) = 4Q2 where P is the price, Q is quantity, and TC is total cost. a. Using marginal analysis, how much of the good should the firm produce and what price should it charge? Call this QM and PM, respectively. b. What profit will this monopolist earn? c. Illustrate this monopolist's demand, marginal revenue, marginal cost, and average total cost functions on a graph. d. Shade in profit on your graph (hint: profit is the area of the rectangle: profit(Q) = (PM-ATC (QM))× Q³)

3. (Monopolist) In a monopolist market, there is only one firm. In this regard, the monopolist is considered a "price maker," and sets price according to market demand. Suppose the demand curve for a monopolist's product is P(Q) = 100-Q and its total cost function is TC(Q) = 4Q2 where P is the price, Q is quantity, and TC is total cost. a. Using marginal analysis, how much of the good should the firm produce and what price should it charge? Call this QM and PM, respectively. b. What profit will this monopolist earn? c. Illustrate this monopolist's demand, marginal revenue, marginal cost, and average total cost functions on a graph. d. Shade in profit on your graph (hint: profit is the area of the rectangle: profit(Q) = (PM-ATC (QM))× Q³)

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 21RQ: How can a monopolist identify the profit-maximizing level of output if it knows its marginal revenue...

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