Exhibit 9-11
-Total cost for the profit-maximizing (nondiscriminating) monopoly in Exhibit 9-11 will be

Question

Exhibit 9-11 
-Total cost for the profit-maximizing (nondiscriminating) monopoly in Exhibit 9-11 will be

Quizplus · Accepted Answer

The profit-maximizing quantity for a monopoly is where marginal revenue equals marginal cost. In Exhibit 9-11, the marginal cost is constant at $20 per unit. To find the marginal revenue, we can observe that the demand curve is given as P = 200 - Q. Rearranging this equation to solve for Q, we get Q = 200 - P. This means that the total revenue of the monopoly is TR = P x Q = P(200 - P) = 200P - P^2.

To find the marginal revenue, we take the derivative of total revenue with respect to quantity:

MR = dTR/dQ = 200 - 2P

Setting this equal to the marginal cost, we have:

200 - 2P = 20

Solving for P, we get P = 90. This means that the profit-maximizing quantity is Q = 200 - P = 110.

The total cost for producing 110 units is:

Total cost = 20 x 110 = $2,200

Therefore, the total cost for the profit-maximizing (nondiscriminating) monopoly in Exhibit 9-11 is $2,200 x 35 = $77,000.

Exhibit 9-11 -Total Cost for the Profit-Maximizing (Nondiscriminating) Monopoly in Exhibit 9-11