Suppose that a monopolist, who sells all units at a uniform price, faces an inverse market demand curve P=100- 2Q. a) If there is no cost of production, what output would the firm produce to maximize profit, what price would the firm charge, and what profit would the firm earn? Give the numerical value of these three variables, showing how you determined them. b) If the firm’s total cost were instead positive, given by the function TC=10Q, what output would the firm produce to maximize profit, what price would the firm charge, and what profit would the firm earn? Give the numerical value of these three variables, showing how you determined them.
Suppose that a monopolist, who sells all units at a uniform price, faces an inverse market demand curve P=100- 2Q. a) If there is no cost of production, what output would the firm produce to maximize profit, what price would the firm charge, and what profit would the firm earn? Give the numerical value of these three variables, showing how you determined them. b) If the firm’s total cost were instead positive, given by the function TC=10Q, what output would the firm produce to maximize profit, what price would the firm charge, and what profit would the firm earn? Give the numerical value of these three variables, showing how you determined them.
Chapter9: Monopoly
Section: Chapter Questions
Problem 7SQP
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Question
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Suppose that a monopolist, who sells all units at a uniform price, faces an inverse market demand curve P=100- 2Q.
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a) If there is no cost of production, what output would the firm produce to maximize
profit, what price would the firm charge, and what profit would the firm earn? Give
the numerical value of these three variables, showing how you determined them.
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b) If the firm’s total cost were instead positive, given by the function TC=10Q, what
output would the firm produce to maximize profit, what price would the firm charge, and what profit would the firm earn? Give the numerical value of these three variables, showing how you determined them.
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