Question

Consider a total cost function of TC = 0.5Q^2 +10Q + 20 and the market demand function Q=70-p.

a What is the profit-maximizing output and price for the perfect competition? Calculate its profit.

b What is the profit-maximizing output and price for the monopolist? Calculate its profit.

c What is the profit-maximizing output and price for the monopolist in the second market? Calculate its profit.

Answer #1

Consider a firm with the demand function P(Q)=(50-2Q), and the
total cost function TC(Q)=10,000+10Q. Find the profit maximizing
quantity. Calculate the profit maximizing price (or the market
price). Hint: MR(Q)=(50-4Q),

Suppose that a price-searcher monopolist had a total cost
function given by: TC= 20 + 0.5Q
+0.2Q2. The demand for the price searcher's
product is given by: QD= 100 -20P.
Calculate the monopolist's profit.
(Do not include a dollar sign in your response. Round to the
nearest two decimals.)

2. The market for air conditioners has: Total Cost: TC = 20 +
10Q +(3/4)Q2 Marginal Cost: MC = 10 + (3/2)Q Marginal Revenue: MR =
1,010 – 0.5Q Demand: Q = 4,040 – 4P
2a. If a monopoly controls the market, calculate the equilibrium
price and quantity of air conditioners.
2b. Calculate the monopoly profits from part a.
2c. If the government imposed a tax of $80 per air conditioner
that the monopoly sells, calculate the equilibrium new price...

Q6. The monopolist produces and distributes the Cartoon
Magazine. Demand is given by P = 1200-10Q. The cost function is TC
= 200Q+15Q2
Your work:
a. What output maximizes its profit?
b. What is the profit-maximizing price?

3. Suppose that a price-searcher monopolist had a total cost
function given by: TC= 20 + 2Q +0.25Q2.
The demand for the price searcher's product is given by:
QD= 100 -5P.
Calculate the price the monopolist will charge.
(Do not include a dollar sign in your response. Round to the
nearest two decimals.)
4. Suppose that a price-searcher monopolist had a total cost
function given by: TC= 20 + 2Q +0.25Q2.
The demand for the price searcher's product is given...

A monopolist facing a market demand Q = 240 – 2p has the total
cost function TC(q) = q2. Draw carefully the relevant
graph with MC, MR, D curves and identify all relevant points,
intersections, intercepts.
(a) What is the monopolist’s profit maximizing quantity and
price?
(b) If the market is reorganized as perfectly competitive, what
should be the market price and quantity?
(c) Calculate the DWL associated with the monopoly in (a).
Now the government notices that the monopolist...

The monopolist produces and distributes the Cartoon Magazine.
Demand is given by P = 1200-10Q. The cost function is TC =
200Q+15Q2
e. Calculate the deadweight loss at the profit-maximizing
price?
f. What are outputs and price if the monopolist wants to
maximize total social surplus?

Consider a monopolist who produces good X using a total cost
function 20 + 12X. The demand
for good X is X = 500 – 2P, where P is the market price.
a. Find the profit maximizing output level for the firm, as well as
the price.
b. Find the DWL at the monopolist’s profit maximizing output.

(3)The demand (P) and total cost ( TC) functions for commodity Z
can be represented by the following equations:
P = 1400 – 7.5Q
TC= Q^3-6Q^2+140Q+750
(a)Graph the marginal revenue and marginal cost for Q = 0, 5,
10, 15, 20 and 25
(b)What is the profit maximizing output for this firm?
(c)Find the price the firm will sell its output.
(d)If the market clears, find the profit the firm could
earn.

1. Consider a monopolist where the market demand curve
for the produce is given by P = 520 - 2Q. This monopolist has
marginal costs that can be expressed as MC = 100 + 2Q and total
costs that can be expressed as TC = 100Q + Q2 + 50. (Does not need
to be done. Only here for reference)
2. Suppose this monopolist from Problem #1 is regulated
(i.e. forced to behave like a perfect competition firm) and the...

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