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Author Question: Urban renewal destroyed potential housing for the homeless. a. True b. ... (Read 203 times)

Mr. Wonderful

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on: Jul 1, 2018
Urban renewal destroyed potential housing for the homeless.
 
  a. True b. False

Question 2

A monopolist faces a demand curve Q = 120 - 2p and has costs given by C(Q) = 20Q + 100.
 
  a. Write the monopolist's profits in terms of the price it charges.
  b. Use the derivative (w.r.t. price) to determine the monopolist's profit-maximizing price.
  c. Now, derive the monopolist's inverse demand based on the demand equation above. Write out the monopolist's profits in terms of quantity.
  d. Use the derivative w.r.t. Q to determine the monopolist's optimal quantity. What price does the monopoly charge?


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katkat_flores

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Reply #1 on: Jul 1, 2018
Answer to Question 1

a

Answer to Question 2

a. (p) = (120 - 2p)p - 20(120 - 2p) - 100
b. d/dp = 120 - 4p + 40 = 0 p = 40
c. p = 60 - .5Q
Pi(Q) = (60 - .5Q)Q - 20Q - 100
d. dPi/dQ = 60 - Q - 20 = 0 Q = 40 and p = 120 - 2(40 ) = 40. The answer is the same whether deriving the optimality condition based on price or quantity.


Mr. Wonderful

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Reply #2 on: Jul 1, 2018
Thank you :)


katkat_flores

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Reply #3 on: Jul 1, 2018
Happy to help you


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