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monopolist's Demand function

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8. A monopolist's Demand function is P=1624-4Q and its Total Cost function is TC=22,000+24Q-4Q2 +1/3Q3, where Q is output produced and sold.
a) At what level of output and sales (Q) and price (P) will Total Profits be maximized?
b) At what level of output and sales (Q) and price (P) will Total Revenue be maximized?
c) At what price (P) should the monopolist shut down?

9. A monopolist has demand and cost curves given by:
QD = 10,000 - 20P
TC = 1,000 + 10Q + .05Q2
a. Find the monopolist's profit-maximizing quantity and price.
b. Find the monopolist's profit.

10. The following matrix shows the payoffs for an advertising game between Coke and Pepsi. The firms can choose to advertise or to not advertise. Numbers in the matrix represent profits; the first number in each cell is the payoff to Coke. (Numbers in millions.)

Coke (rows)/Pepsi (columns) Advertise Don't Advertise
Advertise (10, 10) (500, -50)
Don't Advertise (-50, 500) (100, 100)
a. Explain why this would be described as a Prisoner's Dilemma game.
b. Explain the probable outcome of this game.

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Solution Summary

The dominant strategy for Hilton is presented.