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Consider a monopolist whose cost function is:

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1. Consider a monopolist whose cost function is;c(y) = 2y;where y is the amount of output produced by the monopolist. The monopolist faces a market demand curve described by equation;QD(p) = 11-p/2;where QD is the quantity demanded when the price of a unit of output is equal to p.;a. What is the profit maximizing condition for the monopolist? Just state the condition.;b. The total revenue for this monopolist is given as 2y(11? y) and the associated MR for this total revenue is 2(11-2y). From the cost function, the marginal cost is 2. Verify that the marginal cost is 2. Show your work.;c. Given the MR and MC in part b, what is the optimal output level to be produced? Show your work.

 

Paper#21324 | Written in 18-Jul-2015

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