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You are the manager of a monopoly that faces a demand curve described by P = 63 - EQ
You are the manager of a monopoly that faces a demand curve described by P = 63 - EQ. Your costs are C 10+ 30. Hint: MR = 63 100. The revenue maximizin
ou are a manager in a perfectly competitive market. The price in your market is $14. our total cost curve is C(O) = 10 + 4Q+0.502. Hint: Marginal Cost Curve is: MCQ) 4+Q. What will happen in the long run if there is no change in the demand curve? A Some firms will enter the market eventually. B) Some firms will leave the market eventually C) There will be neither entry nor exit from the market. D) None of the answers is correct.
Expert Solution
Firms will enter the market if the existing firms in the market are earning profits.
Firm maximizes profit where P = MC
14 = 4 + Q
Q = 10
Profit = P x Q - C
Profit = 140 - (10 + 40 + 0.5 x 100) = 40
Option A is correct (some firms will enter the market eventually)
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