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Homework answers / question archive / A monopoly pizza producer has variable cost (VC) and fixed cost (FC) as VC = 3Q? FC = 12 and the market demand function is P = -3Q + 24
A monopoly pizza producer has variable cost (VC) and fixed cost (FC) as VC = 3Q? FC = 12 and the market demand function is P = -3Q + 24. How much will you produce to maximize your profit? (1) 1 (2) 2 (3) 3 4
16. (Continued from #14) What would be the price and the profit, respectively? (1) 12, 18 (2) 14, 16 (3) 16, 14 (4) 18, 12 17. (Continued from #14) What would be the quantity and the price if the market were perfectly competitive? (Hint: find the supply curve and its intersection with the demand curve.) (1) 3/8, 16 (2) 8/3, 16 (3) 3/8, 8 (4) 8/3, 8 18. Compare the results from the perfectly competitive market and the monopoly in the previous questions. We find that the monopoly provides (1) more goods at a higher price. (2) more goods at a lower price. (3) less goods at a higher price. (1) less goods at a lower price.
[Since you have asked for help with Q17 only, I assume that you have solved Q15 and Q16.]
Q17. (2) 8/3, 16.
??????The firm's supply curve is the marginal cost curve.
TVC = 3Q2
Marginal cost (MC) = dTVC/dQ = 6Q --->
MC = 6Q.
So, inverse supply curve equation: P = 6Q
Demand is given as
P = -3Q + 24
Demand and supply intersection:
-3Q + 24 = 6Q ---->
9Q = 24 ---->
Q = 24/9 = 8/3
---> P = (8/3)*6 = 16
So quantity traded in perfect competition is 8/3 and price charged in perfect competition is 16.
Q18. (2) less goods at higher price.
??????Monopoly produces lesser quantity than perfect competition but the market price in monopoly is higher than in perfect competition.
