(Scenario: Home Monopolist) A monopolist faces a demand curve given by P = 60 - 2Q and has total costs given by TC = Q². Its marginal revenue is MR = 60 - 4Q and its marginal cost is MC = 2Q. What price does the monopolist charge with no trade?

Question

Quizplus · Accepted Answer

To find the monopolist's profit-maximizing output and price, we need to set MR = MC and solve for Q:

60 - 4Q = 2Q
60 = 6Q
Q = 10

Now we can plug Q back into either the demand or the marginal revenue equation to find the price:

P = 60 - 2Q
P = 60 - 2(10)
P = 40

Therefore, the monopolist would charge a price of $40 with no trade.

(Scenario: Home Monopolist) a Monopolist Faces a Demand Curve Given