Question

A monopolist has a cost function given by C(Q)=Q2 and faces the demand curve p=120-q a....

A monopolist has a cost function given by C(Q)=Q2 and faces the demand curve p=120-q
a. what is the profit maximizing monopolist output and price
b. what is the consumer surplus ? Monopoly profit?
c. now suppose the monopolist has to follow the narginal cost pricing policy in other word she has to charge competitive prices what is her output and price?

Homework Answers

Answer #1

C(Q) = Q^2

MC = 2Q

p = 120 - q

TR = p * q = 120q - q^2

MR = 120 - 2q

a) Monopolist operate at a point when MR = MC when 120 - 2q = 2q

q = 30

At this q, P = 90

b) Consumer surplus would be shaded portion whose sum is (1/2) * (120 - 90) * (30 - 0) = 450

Total cost of producing 30 unit is 900

Total revenue of producing 30 unit is 120 * 30 - 30^2 = 2,700

Profit = Total revenue - Total cost = 2,700 - 900 = 1,800

c) If they were to follow perfectly competitive price or at a point when D = MC

120 - q = 2q

q = 40

At this q, p = 80

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
​​​​​ A monopolist faces an inverse demand curve P(Q)= 115-4Q and cost curve of C(Q)=Q2-5Q+100. Calculate...
​​​​​ A monopolist faces an inverse demand curve P(Q)= 115-4Q and cost curve of C(Q)=Q2-5Q+100. Calculate industry output, price, consumer surplus, industry profits, and producer surplus if this firm operated as a competitive firm and sets price equal to marginal cost. Calculate the dead weight loss sue to monopoly.
Suppose a monopolist faces the following demand curve: P = 750 – Q.If the long run...
Suppose a monopolist faces the following demand curve: P = 750 – Q.If the long run marginal cost of production is constant and equal to $30. a) What is the monopolist’s profit maximizing level of output? b) What price will the profit maximizing monopolist charge? c) How much profit will the monopolist make if she maximizes her profit? d) What would be the value of consumer surplus if the market were perfectly competitive? e) What is the value of the...
A monopolist faces a demand curve given by P = 70 – 2Q where P is...
A monopolist faces a demand curve given by P = 70 – 2Q where P is the price of the good and Q is the quantity demanded.The marginal cost of production is constant and is equal to $6. There are no fixed costs of production. A. What quantity should the monopolist produce in order to maximize profit?   B. What price should the monopolist charge in order to maximize profit?   C. How much profit will the monopolist make?   D. What is...
1) The inverse demand curve a monopoly faces is p=110−2Q. The​ firm's cost curve is C(Q)=30+6Q....
1) The inverse demand curve a monopoly faces is p=110−2Q. The​ firm's cost curve is C(Q)=30+6Q. What is the​ profit-maximizing solution? 2) The inverse demand curve a monopoly faces is p=10Q-1/2 The​ firm's cost curve is C(Q)=5Q. What is the​ profit-maximizing solution? 3) Suppose that the inverse demand function for a​ monopolist's product is p = 7 - Q/20 Its cost function is C = 8 + 14Q - 4Q2 + 2Q3/3 Marginal revenue equals marginal cost when output equals...
A monopolist faces the inverse demand function p = 300 – Q. Their cost function is...
A monopolist faces the inverse demand function p = 300 – Q. Their cost function is c (Q) = 25 + 50Q. Calculate the profit maximizing price output combination
A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost...
A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q    TC = 5Q MC = 5    a. What is the profit maximizing level of output? b. What is the profit maximizing price? c. How much profit does the monopolist earn?
Consider a pure monopolist who faces demand Q= 205 - 2P and has a cost function...
Consider a pure monopolist who faces demand Q= 205 - 2P and has a cost function C(Q) = 2Q. Solve for the information below, assuming that the monopolist is maximizing profits. The monopolist is able to produce at a constant marginal cost of _________ The monopolist's profit-maximizing level of output is Q* = ______ The monopolist's profit-maximizing price is P* = _________
A monopolist faces a demand curve given by P=40-Q, while its marginal cost is given by...
A monopolist faces a demand curve given by P=40-Q, while its marginal cost is given by MC=4+Q. Its profit maximizing output is a. 8     b. 9      c. 10      d. 11      e. 12 why is the answer (e)?
Consider a monopolist facing the following demand curve: Q = 390 – 0.5P. Further the monopolist...
Consider a monopolist facing the following demand curve: Q = 390 – 0.5P. Further the monopolist faces MCM= ACM = 30. a. Solve the profit-maximizing level of monopoly output, price and profits. b. Suppose a potential entrant is considering entering, but the monopolist has a cost advantage. Thepotential entrant faces costs MCPE = ACPE = 40. Assuming the monopolist continues to profit-maximize,solve the residual demand curve for the potential entrant c. Assume the potential entrant follows the Cournot assumption about...
assume that a monopolist faces a demand curve Q =200 - 10P, and marginal cost of...
assume that a monopolist faces a demand curve Q =200 - 10P, and marginal cost of $15. Compared with the perfectly competitive market's price, assuming the same demand function and costs hold true, what is the Monopolist's mark up? What is the deadweight loss from Monopoly pricing