# Monopolist Question

**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 = Q^{2} – 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?

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