Assume demand for a particular product is given by p= 120 - q and firms produce with costs c(q) = cq+F=20q+ F, i.e., with a marginal cost of 20 and a fixed cost F. (a) Suppose there is a monopolist in the market. (i) How do average costs depend on output? How do we label this relation and what does it mean? (ii) Derive optimal production, price and profits of the monopolist. For what range of F does the monopolist operate?

Assume demand for a particular product is given by p= 120 - q and firms produce with costs c(q) = cq+F=20q+ F, i.e., with a marginal cost of 20 and a fixed cost F. (a) Suppose there is a monopolist in the market. (i) How do average costs depend on output? How do we label this relation and what does it mean? (ii) Derive optimal production, price and profits of the monopolist. For what range of F does the monopolist operate?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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