A monopolist has (1) a demand function Qd = 1400 - 5P (2) a marginal cost...

A monopolist has (1) a demand function Qd = 1400 - 5P (2) a marginal cost function MC = 40 + .80 Q and (3) an average cost function AC = 40 + .40 Q

(a) Find the profit maximizing monopoly price and quantity (b) Calculate he maximum profit. (c) Show the profit maximizing equilibrium on a graph indicting the area representing profit. Include the MC and AC functions on your graph.

Expert Solution

Rahul Sunny answered 2 years ago

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