Question
1.Suppose that the market for wine grapes is a monopoly. The market demand and the monopolist's marginal cost and total cost functions are given as:
1.Suppose that the market for wine grapes is a monopoly. The market demand and the monopolist's marginal cost and total cost functions are given as:
Demand:P=1,200-0.1Q
Marginal Cost:MC=0.1Q
Total Cost:TC=0.005Q2
where Q is the quantity of wine grapes, measured in tons, and P is the price of a ton of grapes. Hint: Remember that you can find marginal revenue, as a function of just Q, from the demand curve.
a.Find the profit maximizing quantity of grapes (Q*) that the monopolist will choose to produce and the price (P*) that it will charge per ton.
b. How much profit does the monopolist earn when it produces Q* tons of grapes and charges a price of P* per ton?
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Managerial economics
Authors: william f. samuelson stephen g. marks
7th edition
9781118214183, 1118041585, 1118214188, 978-1118041581
