The inverse demand function a monopoly faces is p = 10Q–0.5. The firm’s cost curve is C(Q) = 5Q. What is the profit-maximizing solution?
Answer to relevant QuestionsWhy is the ratio of the monopoly’s price to its marginal cost, p/MC, larger if the demand curve is less elastic at the optimum quantity? Can the demand curve be inelastic at that quantity? A monopoly has a constant marginal cost of production of $ 1 per unit and a fixed cost of $ 10. Draw the firm’s MC, AVC, and AC curves. Add a downward- sloping demand curve, and show the profit- maximizing quantity and ...In the “Botox” Mini- Case, consumer surplus, triangle A, equals the deadweight loss, triangle C. Show that this equality is a result of the linear demand and constant marginal cost assumptions.A monopoly produces a good with a network externality at a constant marginal and average cost of 2. In the first period, its inverse demand function is p = 10 – Q. In the second period, its demand is p = 10 – Q unless it ...On July 12, 2012, Hertz charged $ 126.12 to rent a Nissan Altima for one day in New York City, but only $ 55.49 a day in Miami. Is this price discrimination? Explain.
Post your question