1.A medical device company has a monopoly on a certain class of cardiac implants
ID: 1097522 • Letter: 1
Question
1.A medical device company has a monopoly on a certain class of cardiac implants. Demand for the implants is given by P=28000-5Q and marginal revenue is given by MR=28000-10Q. The total fixed costs for the implants division is 50000 and the marginal cost is given by MC=6000, so TC=50000+7000Q. Calculate the profit-maximizing quantity.
2.
A medical device company has a monopoly on a certain class of cardiac implants. Demand for the implants is given by P=28000-5Q and marginal revenue is given by MR=28000-10Q. The total fixed costs for the implants division is 50000 and the marginal cost is given by MC=7000, so TC=50000+7000Q. Calculate the profit-maximizing price.
Explanation / Answer
1
At the profit maximizing quantity, Marginal Price equals Marginal Cost.
Thus,
MR = MC
28000
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