Sub: Economics Topic: Micro Economics
Question:
the price and quantity that the monopolist would choose to maximize its profit
under the more advanced technology and the resulting profit
ClassOf1 provides exert guidance for College, Graduate and High school homework and live online tutoring on subjects like
Finance, Marketing, Statistics, Economics and others. Check out more solved problems in our Solution Library.
We have learned that in a perfectly competitive market, all cost savings from a technological
advance are passed along to consumers in the form of lower prices (Recall the genetically
modified example in lecture notes “Profit Maximization and Competitive Supply in the Long
Run” page 15-16). Is the same true of monopoly? Let’s see.
Now a more advanced technology is available and changes the total cost function of the
monopolist to be:
TC = 0.5Q2 + 10Q
Demand does not change.
Solve for the price and quantity that the monopolist would choose to maximize its
profits under the more advanced technology. And also calculate the resulting profit.
Solution:
We have learned that in a perfectly competitive market, all cost savings from a technological
advance are passed along to consumers in the form of lower prices (Recall the genetically
modified example in lecture notes “Profit Maximization and Competitive Supply in the Long
Run” page 15-16). Is the same true of monopoly? Let's see.
Now a more advanced technology is available and changes the total cost function of the
monopolist to be:
TC = 0.5Q2 + 10Q
Demand does not change.
www.classof1.com
*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting the same in
lieu of your academic submissions for grades.

Sub: Economics Topic: Micro Economics
Solve for the price and quantity that the monopolist would choose to maximize its
profit under the more advanced technology. And also calculate the resulting profit.
Due to the availability of new advanced technology, the Total cost function of the monopolist
as follows,
TC = 0.5Q2 +10Q, and
Demand function does not change, so it will be as like as before,
Demand function: Q d =280- 2P
Total cost function: TC =0.5Q2 + 10Q
Then, MR and MC would be as follows,
TR =P*Q
Where, P = 140 -0.5Q
TR = 140 Q – 0.5Q2
MR ==∂TR/∂Q =140 – Q
MC=∂TC/∂Q =10 + Q
If you like to download the complete solution for free, visit our solution
library by copying to your browser the following link
ClassOf1 provides exert guidance for College, Graduate and High school homework and live online tutoring on subjects like
Finance, Marketing, Statistics, Economics and others. Check out more solved problems in our Solution Library.
www.classof1.com
*The Homework solutions from ClassOf1 are intended to help the student understand the approach to solving the problem and not for submitting the same in
lieu of your academic submissions for grades.