Suppose that a price-searcher monopolist had a total cost function given by: TC= 20 + 2Q +0.25Q2. The demand for the price searcher's product is given by: QD= 100 -5P. Calculate the monopolist's producer surplus.
Suppose that a price-searcher monopolist had a total cost function given by: TC= 20 + 2Q +0.25Q2. The demand for the price searcher's product is given by: QD= 100 -5P. Calculate the monopolist's producer surplus.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Step 1: Define the given problem:
VIEWStep 2: Calculate the marginal cost for the monopolist as follows:
VIEWStep 3: Calculate the marginal revenue as follows:
VIEWStep 4: Derive the profit maximizing point of the monopolist as follows:
VIEWStep 5: Graphical representation:
VIEWStep 6: Calculate the producer surplus as follows:
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