A monopolist faces the inverse demand function described by p = 50 - 4q, where q is output.The monopolist has no fixed cost and his marginal cost is $5 at all levels of output.Which of the following expresses the monopolist's profits as a function of his output? A)50 - 4q - 5 B)50 - 8q C)45q - 4q² D)50q - 4q² - 5 E)None of the above.

Question

Quizplus · Accepted Answer

The monopolist's profit is total revenue minus total cost. Total revenue is pq = (50 - 4q)q = 50q - 4q². Total cost is 5q. Profit is (50q - 4q²) - 5q = 45q - 4q².

A Monopolist Faces the Inverse Demand Function Described by P