ndustry profits and revenue. (Hint: the supply curve is just the marginal cost) d) Suppose that all firms' total costs increased to T C = 44Q. Verify that the increase in marginal cost causes total industry revenue to go up.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.1P
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A monopolist faces a demand curve P = 100 – 4Q
and initially faces total costTC = 12Q.
(a) Calculate the profit-maximizing monopoly
quantity and price, and compute the monopolist's
total revenue and profits at the optimal price.
(b) Suppose that the monopolist's total increases
to TC = 44Q. Verify that the monopolist's total
revenue goes down.
c) Suppose that all firms in a perfectly competitive
equilibrium had a combined total cost T C = 12Q.
Find the long-run perfectly competitive industry
price and quantity. Also what are the combined
industry profits and revenue. (Hint: the supply
curve is just the marginal cost)
(d) Suppose that all firms' total costs increased to T
C = 44Q. Verify that the increase in marginal cost
causes total industry revenue to go up.
Transcribed Image Text:A monopolist faces a demand curve P = 100 – 4Q and initially faces total costTC = 12Q. (a) Calculate the profit-maximizing monopoly quantity and price, and compute the monopolist's total revenue and profits at the optimal price. (b) Suppose that the monopolist's total increases to TC = 44Q. Verify that the monopolist's total revenue goes down. c) Suppose that all firms in a perfectly competitive equilibrium had a combined total cost T C = 12Q. Find the long-run perfectly competitive industry price and quantity. Also what are the combined industry profits and revenue. (Hint: the supply curve is just the marginal cost) (d) Suppose that all firms' total costs increased to T C = 44Q. Verify that the increase in marginal cost causes total industry revenue to go up.
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