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  3. question 3: monopolies [25 points] the demand a

QUESTION 3: Monopolies [25 points] The demand and total cost functions for...

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Accounting

QUESTION 3: Monopolies [25 points]

The demand and total cost functions for a monopoly firm are:

Q(P) = 39.5 0.5P

TC(Q) = 60 Q + 0.5 Q2

a) Plot the demand, marginal revenue, marginal cost, and average total cost curves, including the intersections with the horizontal and vertical axes. [5 points]

b) What are the profit maximising QM and PM for this firm? [5 points]

c) What is the firms profit M? [5 points]

d) What are the firm's fixed and variable costs? [5 points]

e) What would be the socially optimal Q* and P* (round to 1 decimal place if needed)? [5 points]

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