Econ

This is due Thursday. We are studying monopolies, and the question is;

Firm X is a monoply firm. MR and MC for Firm X are as follow: MR=5,110-10Q, MC=10+10Q, where Q is output.

a) Calculate Firm X's profit-maximizing output.
I think this is Q=225

b) If Firm X's price is $60 per unit and average total cost is $10, calculate Firm X's profit.
I think this is $12,750

c) Explain why Firm X will not produce a socially desirable level of output.

Not sure if this is correct. I have: A profit maximizing monopoly with a straight line demand will never produce where demand is inelastic because MR would be negative and could not egual MC.

Please let me know if these answers are correct.

Thanks!


a) I get Q=255. (I think you did also, you just wrote down 225).

b) 255 * (60-10) = 12750. You are correct

c) While your statement is true, it doesnt answer the question.
Monopolists maximize profits by restricting supply. The social loss is generated because the demand at Q exceeds the marginal cost at Q. That is, at Q, somebody is willing to pay for an additional unit that is more than the cost of producing that additional unit.

(The total social loss (aka the social dead weight loss) is measured by the little triange created to the right of Q and under the demand curve and above the supply (marginal cost) curve.)




Thanks so much for your input on c. I didn't think I was answering the question correctly.
Yes, I copied the answer to a. wrong.
Thanks again, you are a BIG help. One more week of this class and it will be over :-)

  1. 👍
  2. 👎
  3. 👁

Respond to this Question

First Name

Your Response

Similar Questions

  1. Economy

    Use the following information to answer the question. There are three firms in an economy: X,Y,Z. Firm X buys $200 worth of goods from firm Y, and $300 worth of goods from firm Z, and produces 250 units of output at $4 per unit.

  2. Statistics/probability

    Of 120 students, 60 are studying French, 50 are studying Latin and 20 are studying French and Latin. Find the probability that a student is: (a) studying French or Latin and (b) studying neither.

  3. Economics

    you are hired as the consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If the firm is

  4. finance firm's sales on credit

    In general, the larger the portion of a firm's sales that are on credit, the: A. lower will be the firm's need to borrow B. higher will be the firm's need to borrow C. more rapidly credit sales will be paid off D. more the firm

  1. Computers

    1. Which of the following study tools would work well for studying Vocabulary? A. making an outline B. summarizing the textbook C. flash cards*** D. comparing notes to the test 2. Which of the following is helpful when studying

  2. English

    A team of explorers ___________ the ocean floor. A.were studying B.are studying C.have been studying D.has been studying I think it is D...?

  3. English

    1.What is the correct way to punctuate the end of this sentence? Did the baseball player say, “I can do the splits” Did the baseball player say, “I can do the splits?” Did the baseball player say, “I can do the

  4. Logarithm Function

    Chels is a recent business grad and has been offered entry level positions with two firms. Firm A offers a starting salary of 40,000 per year with a 2000 per year increase guaranteed each subsequent year. Firm B offers a starting

  1. Economics

    Suppose that a typical firm in a monopolistically competitive industry faces a demand curve given by: q = 60 - (1/2)p, where q is quantity sold per week. The firm's marginal cost curve is given by: MC = 60. 1. How much will the

  2. Math

    A stock increased in value by 7% on Wednesday and then decreased in value by 4% on Thursday. What was the net percentage increase in the value of the stock from the end of the day on Tuesday to the end of the day on Thursday?

  3. Physics

    You are on an airplane traveling 30° south of due west at 130 m/s with respect to the air. The air is moving with a speed 30 m/s with respect to the ground due north. One question.. 2) What is the heading of the plane with

  4. Math

    if x is an even number, what is the quotient of the next greater even number divided by the next greater odd number? i have no idea where to even start with this problem. i would really appriciate some help. Thanks! What can make

You can view more similar questions or ask a new question.