Question

Suppose that you are a monopolist in the market of a specific video game. Your inverse demand curve and cost function are the following:

P = 80 - (Q/2)

TC(Q) = 400 + [(Q^2)/2]

The Equilibrium Quantity Q is:

Select one:

a. 40

b. 80

c. 200

d. 60

Question 2

Suppose that you are a monopolist in the market of a specific video game. Your inverse demand curve and cost function are the following:

P = 80 - (Q/2)

TC(Q) = 400 + [(Q^2)/2]

The Equilibrium Price P is:

Select one:

a. $60

b. $200

c. $40

d. $80

Answer 1

Answer
A monopolist produces at MR=MC
MR=80-Q ...... the MR curve is double sloped than the linear inverse demand curve
MC is a change in the total cost, and it is found by differentiation
MC=dTC/dQ=2Q/2=Q
MC=Q
equating both
80-Q=Q
2Q=80
Q=40 units
the firm produces 40 units of output
Option a
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Answer
the firm charge price from the demand curve at the output level
P=80-(Q/2)
Q=40
P=80-(40/2)
P=$60
the firm price is $60
option a