Supplement%20to%20%20Monopoly - q = 100 p 2 for p > (6)...

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Supplement to Handout on Monopoly Example 1 Let p = 12 q 0 if q > 12 (1) be the inverse demand function and TC ( q ) = q 2 2 (2) be the total cost function. Then TR ( q ) = (12 q ) q ( q ) = (12 q ) q q 2 2 (3) if q is an interior maximum, & 0 ( q ) = 0 or 12 2 q q = 0 or q = 4 (4) ( q ) > 0 : Note that 00 ( q ) < 0 : The monopoly price p = 12 4 = 8 : (5) Example 2 Suppose that the market demand curve is given by
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Unformatted text preview: q = 100 p 2 for p > (6) and the marginal cost is 50 . Write p = 10 p q (7) Thus TR ( q ) = 10 p q q = 10 p q MR ( q ) = 5 p q : (8) 1 So MR = MC yields 5 p q = 50 or q & = 1 100 (9) and p & = 10 p q = 10 : 10 = 100 : (10) 2...
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This note was uploaded on 12/23/2009 for the course ECON 3130 at Cornell University (Engineering School).

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Supplement%20to%20%20Monopoly - q = 100 p 2 for p > (6)...

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