Question
A monopoly firm has the following demand curve: Q = 2,000 25P where Q is its monthly output. Assuming its monthly short-run total cost
A monopoly firm has the following demand curve:
Q = 2,000 – 25P
where Q is its monthly output. Assuming its monthly short-run total cost is described by the function
STC = 500 + 8Q + 0.035Q2
Answer the following questions:
What will be its profit-maximising price and output?
How much profit will it have at the preceding output?
Step by Step Solution
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a The profit maximising condition is found where MC MR Since TC 500 8Q 0035Q2 MC dT...
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Microeconomics
Authors: Douglas Bernheim, Michael Whinston
2nd edition
73375853, 978-0073375854
