Suppose a monopolist faces the following inverse demand function : The monopolist can produce any positive level of output with zero variable cost. Its fixed cost is . Find the profit-maximising output for two cases (i) when and (ii) when .
5 marksMicroeconomicsMonopoly and price discriminationMonopoly equilibrium and marginal revenueHardabout 7 min
JNU SSS 2017 Question 47: Monopoly and price discrimination
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Suppose a monopolist faces the following inverse demand function: p = e^(-Q) The monopolist can produce any positive level of output with zero variable cost. Its fixed cost is F. Find the profit-maximising output for two cases (i) when F = 0·1 and (ii) when F = 0·5.
Monopoly and price discrimination has come up 128 times in 7 exams since 2004.
What this question tests
This question is on Monopoly equilibrium and marginal revenue, part of Monopoly and price discrimination in Microeconomics.
How a monopolist sets price and output where marginal revenue equals marginal cost.
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