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
100-0.1Q/1000+20Q+0.4Q2
10+200Q+4Q2???
To find the total fixed cost for the monopoly, we need to look at the total cost function (TC). The total cost function consists of two parts: total fixed cost (TFC) and total variable cost (TVC).
In this case, the total cost function is given as TC = 1000 + 20Q + 0.4Q^2. To find the total fixed cost, we need to isolate the constant term in the total cost function, which represents the fixed cost.
The total fixed cost (TFC) is the part of the total cost that remains constant regardless of the level of output. In other words, it is the cost that does not depend on the quantity produced.
Therefore, in the given total cost function TC = 1000 + 20Q + 0.4Q^2, the total fixed cost is the constant term, which is 1000.
Hence, the total fixed cost for this monopoly is 1000.