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Suppose a certain city has a monopoly cable-television company. This company has total costs TC = 0.25Q 2 + 15Q + 10 . (Hint: using
Suppose a certain city has a monopoly cable-television company. This company has total costs TC = 0.25Q2 + 15Q + 10. (Hint: using calculus, this means MC = 0.5Q + 15since MC is the derivative of TCwith respect to output.)
The demand in the community is approximated by the equation Qd = 150 - 2P.
- Graphically depict the demand curve as well as the marginal cost (MC) curve.
- If the cable company is free to choose its own price Pm and quantity Qm, graphically depict the monopoly equilibrium price and quantity. Add any other curve(s) to your diagram that may be required to obtain this outcome.
- Compute and state the exact monopolist equilibrium price Pm and quantity Qm that you depicted graphically.
- What will be the profit made by the monopolist in this case? Please explain how you calculated this profit.
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