Question
Tunggal Sdn Bhd is a monopolist. The demand function for its product is estimated to be: Q = 60 - 0.4P + 6Y + 2A
Tunggal Sdn Bhd is a monopolist. The demand function for its product is estimated to be:
Q = 60 - 0.4P + 6Y + 2A
where,
Q = quantity of units sold
P = price per unit
Y = per capita disposable personal income ($)
A = advertising expenditures ($)
The firm's average cost function is:
AVC = Q2 - 10Q + 60
Y is $3 and A is $3 for the period being analysed.
i. If fixed costs are equal to $1,000, derive the firm's total cost function and marginal cost function.
ii. Derive total revenue function and marginal revenue function for the firm.
iii. Calculate the profit-maximising level of price and output for Tunggal Sdn Bhd.
iv. What profit or loss will Tunggal Sdn Bhd earn?
v. If fixed costs were $1,200, how would your answers change for (i) through (iv)?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started