A monopolist set price to p, and consumer quantity demanded to q(p). The monopolist does research to lower the cost of product of its product. If it takes R hours of research, then the unit cost of production is C(R). Each hour of research cost 1 to complete. To summarize, profits are pq(p)-q(p)c(R)- R+10. Which the monopolist maximizes by choosing p and R. a) write the first order conditions for the monopolist's optimisation problem. Elasticity of demand is defined as e =-(q'(p)/q(p))p and describes, if price increase by 1%, by how much quantity demanded falls.

A monopolist set price to p, and consumer quantity demanded to q(p). The monopolist does research to lower the cost of product of its product. If it takes R hours of research, then the unit cost of production is C(R). Each hour of research cost 1 to complete. To summarize, profits are pq(p)-q(p)c(R)- R+10. Which the monopolist maximizes by choosing p and R. a) write the first order conditions for the monopolist's optimisation problem. Elasticity of demand is defined as e =-(q'(p)/q(p))p and describes, if price increase by 1%, by how much quantity demanded falls.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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