- Assume That A Market Is Controlled By A Monopolistic Firm The Inverse Demand Function In This Market Is Given By P 13 1 (59.66 KiB) Viewed 42 times
- Assume That A Market Is Controlled By A Monopolistic Firm The Inverse Demand Function In This Market Is Given By P 13 2 (71.96 KiB) Viewed 42 times
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Assume that a market is controlled by a monopolistic firm. The inverse demand function in this market is given by P = 133.33 -2.67Q. The monopoly's total cost function can be written as TC = (0.67Q + 16.67)Q + 10. P and Q stand for per unit price and quanity, respectively. Answer the following questions. B a. Show the firm's total revenue function and the corresponding marginal revenue function. b. What are the monopoly's average and average variable cost functions, i.e., AC and AVC? c. Show the monopoly's profit function, TT, and draw its sketch graph. Is it always increasing?
a. Show the firm's total revenue function and the corresponding marginal revenue function. b. What are the monopoly's average and average variable cost functions, i.e., AC and AVC? c. Show the monopoly's profit function, TT, and draw its sketch graph. Is it always increasing? continued... page 2 4022ECN d. Using the first and second order conditions, find the value of output Q that maximises the firm's profit and verify that at this value the profit is indeed at the maximum. 0 21 e. If the quantity sold increases by one unit from the profit- maximising quantity found in part (d), will the firm's profit increase, decline or remain unchanged? Briefly justify your answer. 02