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The demand function of a monopoly?
A monopoly firm has the following demand function:
Q = 100 – 0.2P, where Q is the quantity of output sold per month and P is the price per unit. A firm’s short run total cost function per month is: STC = 50 + 20Q + Q2
Based on the above information, you are required to calculate each of the following:
1 Marginal Revenue function (4)
2 Marginal Cost function (4)
3 Profit maximizing price (4)
4 Profit maximizing output (4)
5 Total profit (4)
A little explanation of each of the concepts and how they are calculated will be useful. Also, some web or other resources will be appreciated.
1 Answer
- Anonymous1 decade agoFavorite Answer
1. Q=100-0.2P,or P=500-5Q
PQ=500Q-5Q*2
MR=dPQ/dQ=500-10Q
2.MC=dSTC/dQ=20+2Q
3. MC=MR,500-10Q=20+2Q
Q=480/12=40
P=500-200=300
4. Q=40=100-60
5.PQ=TR=20,000-3,200=16,800
STC=50+800+1,600=2,450
Profit=16,800-2,450=14,350