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    monopoly vs perfectly competitive equilibirium

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    Marginal costs for production and distribution are stable at$5per unit. Calculate output, price and profits at profit-maximizing level. What record price and profit levels would prevail following expiration of copyright protection based on the assumption that perfectly competitive pricing would result?

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    Solution Preview

    To maximize the monopoly profit, the firm use first order condition, i.e.
    MR=MC or
    15-0.00001Q = 5
    then 0.00001Q = 10
    solve for Q*=10/0.00001= ...

    Solution Summary

    The expert determines monopoly versus perfectly competitive equilibrium.