Suppose that a monopolistic firm can produce any level of output at a constant marginal and...
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Suppose that a monopolistic firm can produce any level of output at a constant marginal and average cost of $8 per unit. Assume that the market demand curve is Q=60-1.25P a. What are the values of P and Q that maximize profits for the monopolist? b. Calculate the profit of the monopolistic firm. Assume now that the monopolist can sell its product in two different markets that are separated by some distance. The demand curves for the two markets are given by Q1=50-P1 Q2=70-2P2 c. What levels of outputs and prices would maximize the profit of the monopolist in each market? d. What are total profits in this situation? e. Compare solutions to parts a and b with solution to parts c and d? Suppose that a monopolistic firm can produce any level of output at a constant marginal and average cost of $8 per unit. Assume that the market demand curve is Q=60-1.25P a. What are the values of P and Q that maximize profits for the monopolist? b. Calculate the profit of the monopolistic firm. Assume now that the monopolist can sell its product in two different markets that are separated by some distance. The demand curves for the two markets are given by Q1=50-P1 Q2=70-2P2 c. What levels of outputs and prices would maximize the profit of the monopolist in each market? d. What are total profits in this situation? e. Compare solutions to parts a and b with solution to parts c and d?
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Related Book For
Intermediate Microeconomics and Its Application
ISBN: 978-0324599107
11th edition
Authors: walter nicholson, christopher snyder
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