# 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.

Thanks!

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

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

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. 👍 0
2. 👎 0
3. 👁 180

## Similar Questions

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

asked by Cyd on July 22, 2018
2. ### 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

asked by Sally on December 5, 2006
3. ### 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?

asked by Celetina on December 1, 2019
4. ### 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.

asked by Carline on March 19, 2009
5. ### 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

asked by Jason on July 25, 2008
1. ### Personal

I have a question about like life... it relates to school as well. Like I have a huge project due THIS Thursday and I helped take care of my friends dogs and I have to take pictures of them and my friend says I can take them now

asked by Anonymous on March 18, 2014
2. ### Economics

Two firms produce the same good and compete against each other in a Cournot market. The market demand for their product is P = 204 - 4Q, and each firm has a constant marginal cost of \$12 per unit. MR1 = 204 - 8q1 - 4q2. Let q1 be

asked by Cole on April 11, 2015
3. ### statistics

In a recent survey in a Statistics class, it was determined that only 60% of the students attend class on Thursday. From past data it was noted that 98% of those who went to class on Thursday pass the course, while only 20% of

asked by bilal on November 21, 2011
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

asked by Marie on February 25, 2007
5. ### Financial Management

A firm's stock is selling for \$85, Dividend yield=5%. A 7% growth rate is expected for the common stock. The firm's tax rate is 32%. (question) What is the firm's cost of retained earnings? a)8.16% b)12.00% c)12.35% d)cannot be

asked by Sandra on April 21, 2010
6. ### finance (sales on credit)

In general, the larger the portion of a firm's sales that are on credit, the ... A. lower will be the form'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

asked by Jason on July 26, 2008