During recent years, MicroChips corp has enjoyed substantial economic profits derived from patents covering a wide rang of inventions and innovations for microprocessors used in high-performance desktop computers. A recent introduction, the Penultimate, has proven especially profitable. Market demand and marginal revenue relations for the product are as follows:
Now the AVC are constant at $4,500 per unit.© BrainMass Inc. brainmass.com December 20, 2018, 8:13 am ad1c9bdddf
Case 1 : Monopoly
A monopolist sets output level such that MR=MC to maximize its profit.
In this case MC=AVC=4500
Q=1000/.01 =100,000 ...
Solution describes the steps to calculate economic profits in case of monopoly and perfect competition.