) The Epson Company is a monopolist in the market and faces the demand curve shown in the igure below. The firm's marginal cost curve is MC= 100 + 2Q. -. What is the firm's profit-maximizing output and price? Price ($/unit) 400 0 D 200 Quantity of printers (thousand)

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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2) The Epson Company is a monopolist in the market and faces the demand curve shown in the
figure below. The firm's marginal cost curve is MC= 100 +2Q.
a. What is the firm's profit-maximizing output and price?
Price
($/unit)
400
0
D
200
Quantity of printers
(thousand)
b. If the firm's demand changes to P = 300 - Q while its marginal cost curve remains the same,
what is the firm's profit-maximizing level of output and price? How does this compare to your
answer for (a)?
c. Draw a diagram showing these two outcomes. Holding marginal cost equal, how does the
shape of the demand curve affect the firm's ability to charge a high price? (bonus question 5
points)
Transcribed Image Text:2) The Epson Company is a monopolist in the market and faces the demand curve shown in the figure below. The firm's marginal cost curve is MC= 100 +2Q. a. What is the firm's profit-maximizing output and price? Price ($/unit) 400 0 D 200 Quantity of printers (thousand) b. If the firm's demand changes to P = 300 - Q while its marginal cost curve remains the same, what is the firm's profit-maximizing level of output and price? How does this compare to your answer for (a)? c. Draw a diagram showing these two outcomes. Holding marginal cost equal, how does the shape of the demand curve affect the firm's ability to charge a high price? (bonus question 5 points)
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