A monopolist faces the inverse demand function described by p = 23 - 5q, where q is output.The monopolist has no fixed cost and his marginal cost is $6 at all levels of output.Which of the following expresses the monopolist's profits as a function of his output? A)23 - 5q - 6 B)17q - 5q² C)23 - 10q D)23q - 5q² - 6 E)None of the above.

Question

Quizplus · Accepted Answer

The monopolist's profit function is given by:

Profit = Total Revenue - Total Cost

Total Revenue = Price x Quantity

Total Revenue = [23F1F1F1S1F1F1F10 5q - F1F1F1S1F1F1F10 5q^2]

Total Cost = Marginal Cost x Quantity

Total Cost = 6q

Therefore, Profit = [23F1F1F1S1F1F1F10 5q - F1F1F1S1F1F1F10 5q^2] - 6q

Simplifying,

Profit = 23F1F1F1S1F1F1F10 10q - F1F1F1S1F1F1F10 5q^2

Hence, the correct choice is C.

A Monopolist Faces the Inverse Demand Function Described by P