Explore BrainMass
Share

Calculating profit maximizing output and price level

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

For a monopoly, total and marginal revenue relations are as follows:

TR = $250Q-$0.001Q2

MR = MTR/MQ = $250-$0.002Q

MC = $150

A. As a monopoly, calculate output, price and profits at the profit maximizing level.

B. What price and profit levels would prevail following expiration patent protection (assume perfectly competitive pricing would result).

© BrainMass Inc. brainmass.com March 21, 2019, 5:50 pm ad1c9bdddf
https://brainmass.com/economics/price-levels/calculating-profit-maximizing-output-price-level-234780

Solution Preview

Solution:

A. As a monopoly, calculate output, price and profits at the profit maximizing level.

TR=250Q-0.001 Q^2

Marginal Revenue=MR=d(TR)/dQ=250-0.002Q

MC=150

A monopolist sets its output such that MR=MC to maximize his profits
Put ...

Solution Summary

Solution describes the steps for calculating profit maximizing ouput level, price and profit for a monopoly firm. It also calculates price and output level for the firm on expiry of patent protection.

$2.19