Author Question: A monopolist has demand and cost curves given by: QD = 1000 - 2P TC = 5,000 + 50Q a. Find ... (Read 16 times)

Arii_bell · **on:** Jul 1, 2018

A monopolist has demand and cost curves given by:

QD = 1000 - 2P
TC = 5,000 + 50Q

a. Find the monopolist's profit-maximizing quantity and price.
b. Find the monopolist's profit.

Question 2

If government imposes an excise tax on a good and the tax burden is borne equally by buyers and sellers, then

A) price elasticity of demand is unitary.
B) price elasticity of supply is unitary.
C) the absolute values of price elasticities of demand and supply are equal.
D) None of the above

nanny · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

a. MR = 500 - Q
MC = 50
50 = 500 - Q
Q = 450
P = 275
b. Profit = 275 450 - 5,000 - 50 450 = 96,250

Answer to Question 2

C