Explore BrainMass
Share

Explore BrainMass

    Demand Curve and Total Cost Curve

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

    Please study these, you will see them again.

    1. Question 1 - 4 using the information presented in question 1.

    A monopoly faces the following demand curve and total cost curve:
    Q = 2400 -100P
    TC = 150,000 + 6Q.

    Find the profit maximizing level of price
    a. P = $15
    b. P = $16
    c. P = $17
    d. P = 19

    2. Find the profit maximizing output:
    a. Q = 100 units
    b. Q = 900 units
    c. Q = 1000 units
    d. Q = 90 units
    e. cannot be derived

    3. The total cost (TC) of the monopolist corresponding to the profit maximizing level of output is:

    a. $150,000
    b. $206,000
    c. $155,400
    d. impossible to determine with the given information
    e. $200,000

    4. The average total cost (ATC)of the firm corresponding to the profit maximizing level of output is:
    a. $166.66
    b. $132.32
    c. $160
    d. $172.66

    5 . In the long run, new firms will keep entering a monopolistically competitive industry:
    a. provided economies of scale are being realized.
    b. even though losses are incurred in the short run.
    c. until minimum average total cost is achieved.
    d. until economic profits are zero.

    © BrainMass Inc. brainmass.com October 9, 2019, 4:34 pm ad1c9bdddf
    https://brainmass.com/economics/price-levels/demand-curve-and-total-cost-curve-36019

    Attachments

    Solution Preview

    1. Questtion 1 - 4 using the information presented in question 1.
    A monopoly faces the following demand curve and total cost curve:
    Q = 2400 -100P
    TC = 150,000 + 6Q. Find the profit maximizing level of price
    a. P = $15
    b. P = $16
    c. P = $17
    d. P = 19

    The demand curve can be written into
    P=24 - 0.01 Q
    Then total revenue is
    TR = P*Q = (24 - 0.01 Q)*Q = 24Q - 0.01 Q^2
    So marginal revenue is
    MR = dTR / dQ = 24 - 0.02Q

    From TC = 150,000 + 6Q we calculate ...

    Solution Summary

    In the long run, new firms will keep entering a monopolistically competitive industry:
    a. provided economies of scale are being realized.
    b. even though losses are incurred in the short run.
    c. until minimum average total cost is achieved.
    d. until economic profits are zero.

    $2.19