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The demand for a monopolist's output is q = 6,000/((p+7)^2) , where p is its price. It has...

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The demand for a monopolist's output is {eq}q = \frac{6,000}{(p+7)^2} {/eq} , where p is its price. It has constant marginal costs equal to $5 per unit. What price will it charge to maximize its profits?

Monopoly profit maximization:

All businesses aims at maximizing their profit while minimizing their costs in order to optimize revenues. Monopoly is a type of market structure where production and supplying decision are undertaken by sole firm in the whole market. Monopolists is the sole producer and supplier of goods and services in the economy. This make him to minimize quantity of output and selling it at high prices. This is achieved by setting Marginal cost equal to Marginal revenue.

Answer and Explanation: 1

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{eq}Q=\frac{6000}{(P+7)^2}\, MC=$5 {/eq}

Monopolist set Marginal revenue (MR) equal to the Marginal cost (MC) to maximize profits.

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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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