Consider a single price monopoly that faces a market demand curve for a good is given by the equation π=100β.1π and the total cost function is given as ππΆ=1000+20π+.4π2.
a. What is the total fixed cost for this monopoly?
P=TC
100-.1Q = 1000+20Q+.4Q2
1000-100=.1Q+20Q+.4Q2
900= 20.1Q+.4Q2
900=4Q(5.025 + Q)
I NEED THE ANSWERS
178.95
To find the total fixed cost for this monopoly, we need to isolate the terms related to fixed cost in the total cost function. The total cost function given is TC = 1000 + 20Q + 0.4Q^2.
Fixed costs are independent of the level of output, so they do not vary with changes in quantity. Therefore, fixed costs are represented by the constant term in the total cost function. In this case, the fixed costs are equal to 1000.
So, the total fixed cost for this monopoly is 1000.