check your undestaning week 6

. Unique Creations holds a monopoly position in the production and sale of magnometers.

The cost function facing Unique is estimated to be

TC = $100,000 + 20Q

a. What is the marginal cost for Unique?

 

MC = Taking the partial derivative of TC with respect to Q

MC = dTC / dQ = d(100,000) / dQ = 20 (marginal cost for Unique)

 

c. What is the marginal revenue at the price computed in Part (b)?

 

Given price computed in Part (b) to be $60, therefore MR

MR = P(1 + 1/Ed)  where Ed  = -1.5 then

MR = 60(1 + 1/-1.5) = $20
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