For a monopolist firm the demand and the total cost functions are given as Q = 20- 0.5P and TC= 4Q2-8Q+15, respectively. (8 marks) Find a) the optimum quantity and the optimum price level and the profit/loss on these levels b) at what price should the monopolist shut down? c) Show the economic profit (loss) of the firm in a graphic representation

For a monopolist firm the demand and the total cost functions are given as Q = 20- 0.5P and TC= 4Q2-8Q+15, respectively. (8 marks) Find a) the optimum quantity and the optimum price level and the profit/loss on these levels b) at what price should the monopolist shut down? c) Show the economic profit (loss) of the firm in a graphic representation

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.5P

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Question

For a monopolist firm the demand and the total cost functions are given as Q = 20-

0.5P and TC= 4Q2-8Q+15, respectively. (8 marks)

Find

a) the optimum quantity and the optimum price level and the profit/loss on these levels

b) at what price should the monopolist shut down?

c) Show the economic profit (loss) of the firm in a graphic representation

Definition Definition Amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item

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