Reference no: EM131007830
A profit-maximizing monopolist produces integrated circuits for computers using a single variable input labor. The demand function for the monopolist has been estimated as:
Q = 10,000 − 40P + 0.8M − 400PR
Where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The manager has forecasted the values of M and PR will be $50,000 and $20, respectively, in 2012. The average variable cost curve for this firm has been estimated as:
AVC = 400 − 0.10Q + 0.0004Q2
A) What is the marginal cost function?
B) What is the profit-maximizing (or loss-minimizing) level of production?
C) What is the value of average variable cost at the optimal level of output?
D) What is the optimal price?
E) What is the firm’s forecasted profit (loss) in 2012?
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