Consider a monopolist facing linear demand P(Q) = 16 – Q. Find the monopolist’s profit-maximizing choice...

Consider a monopolist facing linear demand P(Q) = 16 – Q.
1. Find the monopolist’s profit-maximizing choice of price and quantity if the total cost function is C(Q) = 8Q.
2. Find the monopolist’s profit-maximizing choice of price and quantity if instead C(Q) = 2Q². Note that this cost function yields exactly the same total cost as the original cost function C(Q) = 8Q for the monopolist’s optimal quantity in 2.1. Explain why the monopolist’s optimum quantity, however, is not the same in 2.1 and 2.2

Expert Solution

Rahul Sunny answered 1 year ago

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