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We ’re Fas te r th an you r De adl ine s
Subject : Economics
Topic : Micro Economics
Onlineassignment.net
We ’re Fas te r th an you r De adl ine s Question: Optimum level of production and price level for monopolies
A monopoly is considering selling several units of homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 200 – 2P, and the marginal cost of production is $40.
f. Determine the optimal number of units to put in a package.g. b. How much should the firm charge for this package??
Optimum level of Quantity is(Q) = 60 And Price (P) is = 70
Solution:
• Given Information are: • Qd = 200 – 2p
MC = 40
• Therefore Qd = 200 – 2p • Price (p) = 100 – (Q/2)
• Total Revenue = 100Q – (Q^2/2)
Marginal Revenue = 100 – Q
MR = MC (Monopoly condition)
100 – Q = 40
Optimum level of Quantity is(Q) = 60 And Price (P) is = 70
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