Question
per unit. The total cos incurred consists of a fixed overhead of 28 dollars plus production cost of 2 dollars per unit of x. i Write down the monopolist's profit as a function of x (2 Marks) ii Find the maximum profit realized by the monopolist in producing x units of the commodity (2 Marks)
Solution
4.2
(334 Votos)
Iker
Mestre · Tutor por 5 anos
Resposta
To find the monopolist's profit as a function of x, we need to consider the total revenue and total cost.Total Revenue (TR) = Price per unit * Quantity soldTotal Cost (TC) = Fixed Cost + (Production Cost per unit * Quantity produced)Given that the price per unit is
28, and the production cost per unit is
10 * x) - (28 + 2x)Profit = 10x - 28 - 2xProfit = 8x - 28So, the monopolist's profit as a function of x is:Profit = 8x - 28To find the maximum profit realized by the monopolist in producing x units of the commodity, we need to find the value of x that maximizes the profit function.To do this, we can take the derivative of the profit function with respect to x and set it equal to zero:d(P) / dx = 8Setting the derivative equal to zero and solving for x:8 = 0This equation has no solution, which means that the profit function is a linear function and does not have a maximum value. The profit will continue to increase as the quantity produced increases.Therefore, there is no maximum profit realized by the monopolist in producing x units of the commodity.