6a. Consider the monopolist that faces the following market demand and total cost functions: P Q = 30 - TC= 100-5Q+Q? i. Find the profit-maximizing price (Pm) and output (Qm) for this firm. At this price-quantity combination, how much is consumer surplus? How much economic profit is this monopoly eaming?

6a. Consider the monopolist that faces the following market demand and total cost functions: P Q = 30 - TC= 100-5Q+Q? i. Find the profit-maximizing price (Pm) and output (Qm) for this firm. At this price-quantity combination, how much is consumer surplus? How much economic profit is this monopoly eaming?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. For a firm in a perfectly competitive market, its marginal revenue a) is constant with respect to the quantity produced. b) increases with the quantity produced. c) decreases with the quantity produced. d) is inversely proportional to the quantity produced. 2. Which of the following is a characteristic of a monopolist firm but not of a perfectly competitive firm? a) A monopolist firm maximizes profit by producing at a level such that MR = ATC. b) A monopolist firm is a price taker.c) The demand facing a monopolist firm is downward sloping.d) A monopolist firm does not have market power.
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. A monopolist sells two products Q1 and Q2 for which the demand functions are: Q1 = 100 – 3P1 + 2P2 , Q2 = 75+0.5P1 - P2 and the joint cost function is TC = Q1 2 + 2Q1Q2 + Q2 2 . a. Use Cramer’s rule method to find the prices. Solve for the profit maximizing level of output and the maximum profit. b. Use the Hessian to check the second-order condition.
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