Firm total cost function: C = 100 + 2Q2 Firm marginal cost function: MC = 4Q Industry demand...
Question:
Firm total cost function: C = 100 + 2Q{eq}^2 {/eq}
Firm marginal cost function: MC = 4Q
Industry demand curve: P = 90 - 2Q
Industry marginal revenue curve: MR = 90 - 4Q
a. If there is only one firm in the industry, find the monopoly price, quantity, and level of profit.
b. Find the price, quantity, and level of profit if the industry is competitive.
c. Graphically illustrate the demand curve, marginal revenue curve, marginal cost curve, and average cost curve. Identify the difference between the profit level of the monopoly and the profit level of the competitive industry.
Monopoly
In economics, a monopoly is a type of market structure wherein there is only a single seller producing a product with no close substitutes. Since there are no other sellers in the industry, the monopolist can generate higher profits by setting a price greater than marginal cost and producing at an output level at which MR = MC.
Answer and Explanation: 1
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View this answera. If there is only one firm in the industry, find the monopoly price, quantity, and level of profit.
MR = MC
90 - 4Q = 4Q
Q = 11.25
Substituting...
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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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