How can I begin this economics problem?
This is the graph http://img156.imageshack.us/img156/8899/...
The info is: The cost of dina's coiffeur is that it has 2 perm machines each has a cost of $100 and a unit cost of a perm is $20
I dont know how to begin with the info given.
I need to find the maximizing profit in a perfectly competitve industry and monopoly.
The formula for profit is
Profit = (p x q) - (atc x q ) or (p x q) - (w x l) - (r x k) - FC
But i dont know what numbers to plug in.
Also, how do i find the marginal cost, so i can draw the graph.
Answer:
Monopoly pricing:
1. Turn the demand eqn into revenue.
p=200 - 2Q
R=P*Q=200Q-2Q^2
2. find marginal revenue (differentiate wrt q)
MR=200-4Q
3. set equal to marginal cost
200-4Q=20
4. solve for Q
Q=(200-20)/4=45
5. solve for price
P=200-2*45=110
6. find profit
prof=110*45-20*45-200
competitive pricing:
In this case, the MC = LRAC, so the solution is the same.
The answers post by the user, for information only, FunQA.com does not guarantee the right.
More Questions and Answers: