Marginal monthly cost to the monopoly

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A local cell phone monopoly faces the following monthly inverse-demand for lines from a typical family: P = 100 – 20Q. The total cost to the monopoly is C(Q) = 20Q. This implies that the marginal monthly cost to the monopoly is $20 per line. (Please show your work for each part)

a. How many lines does a typical family buy and what is the price per line? (This is the standard monopoly problem.)

b. How many phone lines will be part of the family plan and what will be the total cost to the family? Use the diagram below to illustrate how you find the total price and quantity of the plan. Use the same inverse-demand and cost functions from part a.

Reference no: EM13744171

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