Martin Monopolist faces the following demand function: y = zw,utn, — ar. manor nas the following...

Question

Martin Monopolist faces the following demand function: y = zw,utn, — ar. manor nas the following cost function: TC = 4,500,000 + 150Q.
9. Calculate the profit maximizing price and quantity. 10. Calculate the maximum profits of the firm. 11. Graph the demand, marginal revenue, marginal cost and average cost functions for the firm. 12. Shade in the area that represents the profits of the firm. 13. Now assume that the lirm is regulated so that price = average cost. What price and quantity does this correspond to? 14. What is the deadweight loss from monopoly if the firm is left unregulated? 15. What is the deadweight loss from monopoly if the firm is regulated so that price = average cost? 77.-1

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David · Accepted Answer

The equation fro demand curve is : P= A- mQ. 
Here m =1700/8400. We also know that at Q=0,P=1700. Plugging in these values in the demand 
equation we get P= 1700-0.2Q 
Hence,  TR= P*Q= 1700Q- 0.2Q^2, MR=(dTR/dQ)= 1700-0.4Q
From the graph we also get that the slope of the MC curve is (10/100)=0.1. 
So we can write the equation for the MC curve is MC= B+0.1Q. Again at Q=0, MC= 50.  
Hence MC= 50+0.1Q 
So TC = 50Q+0.05Q^2+FC, FC=80,000. So,

Martin Monopolist faces the following demand function: y = zw,utn, — ar. manor nas the following cost function: TC = 4,500,000 + 150Q. 9. Calculate the profit maximizing price and quantity. 10....

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