The optimal level of output of the monopolist is the level of output that maximizes the monopolist's profit. To find this, we need to solve the following equation:
Max Profit = D(p) * Q - c(Q)
Where D(p) is the demand function, Q is the level of output, and c(Q) is the cost function.
We can solve this equation by taking the derivative of the profit equation with respect to Q and setting it equal to zero. This gives us the following equation:
0 = D'(p) - 2Q
Solving for Q, we get:
Q = D'(p) / 2
Substituting in the given demand and cost functions, we get:
Q = 100 / (2p)
Therefore, the optimal level of output of the monopolist is 100 / (2p).
If D(p) = 100/p and c(y) = y2, what is the optimal level of output of
the monopolist?
1 answer
1 answer