Economics/Algebra

posted by .

A monopolist has a constant marginal and average cost of $10 and faces a demand curve of QD = 100 - 10P. Marginal revenue is given by MR=100-.20P.

a. Calculate the monopolist's profit maximizing quantity, price, and profit.
b. Now suppose that the monopolist fears entry, but thinks that other firms could produce the product at a cost of $15 per unit (constant marginal in average cost) and that many firms could potentially enter. How could the monopolist attempt to deter entry, and what would the monopolist quantity and profit be now?
c. Should the monopolist try to deter entry by setting a limit price?

  • Economics/Algebra -

    I know the answer for a.

    Profit maximizing quantity: 450
    Profit maximizing price: $55
    Profit: $20,250

  • Economics/Algebra -

    Calculate the monopolist’s profit-maximizing quantity, price, and profit.
    Q=450, P=55, Profit=

    c. Now suppose that the monopolist fears entry, but thinks that other firms could produce the product at a cost of $15 per unit [constant marginal and average cost] and that many firms could potentially enter. How could the monopolist attempt to deter entry, and what would be the monopolist’s quantity and profit be now?.
    One way to limit entry would be to lower the price of the product since the average cost is $10 to make and the fear is that a firm can make it on a average cost of $15. Then make the product sell for less than what it takes on average for the other firm to make it.

    c. Should the monopolist try to deter entry by setting a limit price?
    Yes, by setting a limit price you can deter other firms form coming in on the market. This is done by lowering the price so that others do not want to enter into the market.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. economics

    Suppose a monopolist faces an inverse demand function P=100-1/2Q, and the monopolist has a fixed marginal cost of $20. How much more would the monopolist make from perfect price discrimination compared to simply producing where marginal …
  2. Economics/Math

    The demand curve for a monopolist is Qd = 500 - P and the marginal revenue function is MR = 500 - 2P. The monoploist has a constant marginal and average total cost of $50 per unit. a. Find the monopolist's profit maximizing output …
  3. Economics/Algebra

    The demand curve for a monopolist is Qd = 500 - P and the marginal revenue function is MR = 500 - 2P. The monopoloist has a constant marginal and average total cost of $50 per unit. a. Find the monopolist's profit maximizing output …
  4. To: Economyst - Can you please help me?

    The demand curve for a monopolist is Qd = 500 - P and the marginal revenue function is MR = 500 - 2P. The monopoloist has a constant marginal and average total cost of $50 per unit. a. Find the monopolist's profit maximizing output …
  5. Microeconomics

    The following table indicates the prices various buyers are willing to pay for a Miata sports car: Buyer A Maximum price $50,000 Buyer B Maximum price $40,000 Buyer C Maximum price $30,000 Buyer D Maximum price $20,000 Buyer E Maximum …
  6. college/microeconomics

    The following table indicates the prices various buyers are willing to pay for a Miata sports car: Buyer A Maximum price $50,000 Buyer B Maximum price $40,000 Buyer C Maximum price $30,000 Buyer D Maximum price $20,000 Buyer E Maximum …
  7. economics

    A monopolist faces an upward-sloping marginal cost curve. Its profit-maximizing quantity will be a. at the minimum point of the marginal cost curve b. less than the (total) revenue-maximizing quantity c. equal to the (total) revenue-maximizing …
  8. Economics

    Suppose the demand curve for a monopolist is Qd = 500 – P, and the marginal revenue function is MR = 500 -2Q. The monopolist has a constant marginal and average total cost of $50 per unit. A. Find the monopolist’s profit- maximizing …
  9. Economics

    . Suppose the demand curve for a monopolist is QD =500 - P, and the marginal revenue function is MR =500 – 2Q. The monopolist has a constant marginal and average total cost of $50 per unit. a. Find the monopolist’s profit – maximizing …
  10. economics

    Suppose the demand curve for a monopolist is QD = 500 − P, and the marginal revenue function is MR = 500 − 2Q. The monopolist has a constant marginal and average total cost of $50 per unit. a.Find the monopolist’s profit-maximizing …

More Similar Questions