Consider a monopolist facing linear demand P(Q) = 16 - Q. Find the monopolist's profit-maximizing...
Question:
Consider a monopolist facing linear demand P(Q) = 16 - Q. Find the monopolist's profit-maximizing choice of price and quantity if C(Q) = 8Q so that marginal cost is constant at 8.
Monopoly's Profits
In economics, monopoly profits are determined by subtracting the total revenue from the total cost at the point where the marginal revenue is equal to the marginal cost. The profit at this point is maximum.
Answer and Explanation: 1
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The demand function for the monopolist is given as:
{eq}P=16-Q {/eq}
The total revenue is equal to:
{eq}TR=PQ\\[0.3cm] TR=(16-Q)Q=16Q-Q^2 {/eq...
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What is a Monopoly in Economics? - Definition & Impact on Consumers
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Chapter 7 / Lesson 2
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Understand the meaning of a monopoly in economics and what it does. Also, know the characteristics of a monopoly and the different types of monopolies.
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