Assume that a monopolist sells a product with a total cost function: TC= 1,200 +0.502. The market demand curve is given by the equation: Q = 300 - P. For what range of output will the firm's revenue be increasing? For this monopolist, the profit-maximizing price is At this price, the monopoly will earn profit equal to If this market were supplied by many firms with the same cost function, how much would be produced? price would it be sold? Calculate the loss in efficiency in this market due to the monopoly. at which it will sell ✓units of output. ✓ At what
Assume that a monopolist sells a product with a total cost function: TC= 1,200 +0.502. The market demand curve is given by the equation: Q = 300 - P. For what range of output will the firm's revenue be increasing? For this monopolist, the profit-maximizing price is At this price, the monopoly will earn profit equal to If this market were supplied by many firms with the same cost function, how much would be produced? price would it be sold? Calculate the loss in efficiency in this market due to the monopoly. at which it will sell ✓units of output. ✓ At what
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.3P
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Monopolist: A monopolist is a single seller in the market and hence he faces the downward sloping demand curve. Hence at profit maximization it requires MR = MC. A monopolist will keep on producing output as long as MR (Marginal revenue) > MC (marginal costs). Because it will increase his total profits. And it will not produce the additional unit if it has higher MC compared to MR because that would lead to decrease his total profits. Hence, he will produce his output up to the level where MR = MC.
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