Suppose that the industry demand curve is given by P = 200 - Q and an incumbent monopolist faces the following total cost function: T CI = 50qI and potential entrants face the following cost function: T CE = 60qE. a. What is the limit price in this market? b. If the monopolist charged its profit-maximizing price, what would its profits equal? c. If the monopolist charged the limit price, what would its profits equal? Please write detailed answers, thanks a lot.
Suppose that the industry demand curve is given by P = 200 - Q and an incumbent monopolist faces the following total cost function: T CI = 50qI and potential entrants face the following cost function: T CE = 60qE. a. What is the limit price in this market? b. If the monopolist charged its profit-maximizing price, what would its profits equal? c. If the monopolist charged the limit price, what would its profits equal? Please write detailed answers, thanks a lot.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that the industry demand curve is given by P = 200 - Q and an incumbent monopolist faces the following total cost function: T CI = 50qI and potential entrants face the following cost function: T CE = 60qE.
a. What is the limit
b. If the monopolist charged its profit-maximizing price, what would its profits equal?
c. If the monopolist charged the limit price, what would its profits equal?
Please write detailed answers, thanks a lot.
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