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Monopoly – short run equilibrium

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Malinga Perera
Malinga Perera
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Monopoly – short run equilibrium • MC = MR • Slope of the MC > slope of the MR at the point of intersection • Example Q = 50 – 0.5P TC = 50 + 40Q What is TR? MR?MC? Profit maximization out put?
• TR Demand curve is solved for P P = 100 – 2Q TR = PQ TR = Q(100 – 2Q) TR = 100Q – 2Q2 • MR MR = dR = 100 – 4Q dq • MC TC = 50 + 40Q MC = dTC = 40 dq
• Profit maximization output? MR =MC 100 – 4Q = 40 Q =15 • What is the price at which profits are maximizing? P = 100 – 2Q P = 100 – 2* 15 = 70 • What is the total profit when profits are maximizing? Profits = TR –TC = 1050 -650 = 400

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Monopoly – short run equilibrium

  • 1. Monopoly – short run equilibrium • MC = MR • Slope of the MC > slope of the MR at the point of intersection • Example Q = 50 – 0.5P TC = 50 + 40Q What is TR? MR?MC? Profit maximization out put?
  • 2. • TR Demand curve is solved for P P = 100 – 2Q TR = PQ TR = Q(100 – 2Q) TR = 100Q – 2Q2 • MR MR = dR = 100 – 4Q dq • MC TC = 50 + 40Q MC = dTC = 40 dq
  • 3. • Profit maximization output? MR =MC 100 – 4Q = 40 Q =15 • What is the price at which profits are maximizing? P = 100 – 2Q P = 100 – 2* 15 = 70 • What is the total profit when profits are maximizing? Profits = TR –TC = 1050 -650 = 400