Question

You are the manager of a monopoly that faces a demand curve described by ?? = 20 ? 2??. Your costs are: ???? = ?? + 2?? + 6

26. What is the revenue-maximizing level of output for this firm?

14

3

5

None of the above.

27. What is the profit-maximizing level of output for this firm?

14

3

5

None of the above.

Answer 1

Answer
Q26
The revenue is maximum when marginal revenue equal to zero
MR=20-4Q ............. the MR curve is double sloped than the demand curve
equating to zero
20-4Q=0
4Q=20
Q=5
the revenue is maximum at Q=5
option 3
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Q27
profit is maximum at MR=MC
MC=dTC/dQ=1+2=3
equating both
20-4Q=3
4Q=17
Q=4.25

option 4

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but I think ur TC function is wrong, it is TC=Q^2+2Q+6
then the answer is
MC=dTC/dQ=2Q+2
equating both
2Q+2=20-4Q
6Q=18
Q=3
option 2
please comment on the question if there is the change in the TC function

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