Monopolist Question

SoccerBoss
Category:
Economics
Price: $20 USD

Question description

A company is a monopolist. 

The demand function for its product is as follows:

  Q = 60 – 0.4P + 6Y + 2A

Where Q = quantity sold in units

  P = Price per unit

  Y = per capita disposal income (thousands of dollars)

A = hundreds of dollars of advertising expenditures

The firm’s average variable cost function is

AVC = Q2 – 10Q + 60

  Y = 3 (thousand) and

  A = 3 (hundred) for the period being analyzed.

A. If fixed costs are equal to $1,000, derive the firm’s total cost function and marginal cost function.

C(q) = fixed costs + variable cost

B. Derive a total revenue function and marginal revenue function for the firm.

C. Calculate the profit maximizing level of output and price for the firm.

D. What will the profit be?


Tutor Answer

(Top Tutor) Daniel C.
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School: Duke University
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