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Bookmarks Window Help ? webcourses.ucf.edu Quiz: EC02023 Quiz 6 ECO2023 Scrogin Exam 3 Sp O produce 60 units of output and suffer a total loss of $360 O produce 0 units of output (shut down) and suffer a total loss of $30 D Question 14 2 pts Consider a monopoly whose total cost function is TC 20+ 10Q+0.3Q and whose marginal cost function is MC 10 + 0.6Q. The demand function for the firm's good is P 120-0.2Q. The firm optimizes by producing the level of output that maximizes profit or minimizes loss. If the firm uses a uniform pricing strategy, then the firm will: produce 90 units of output, charge a price of $102 and earn a profit of $9180 O produce 90 units of output, charge a price of $102, and earn a profit of $7460 O produce 110 units of output, charge a price of $98, and earm a proft of $10780 O produce 110 units of output, charge a price of $98, and earn a proft of $6030 Question 15 2 pts Suppose a firm is producing a level of output such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $8 per unit

Explanation / Answer

The correct choice is:- Produce 110 units of output, charge a price of $ 98, and earn a profit of $ 6030

A monopoly firm produces output at which marginal revenue equals marginal cost

Revenue = Price * quantity demanded

Revenue = ( 120 - 0.2Q)Q

Marginal revenue = 120 - 0.4Q

Marginal cost = 10+0.6Q

Equating marginal revenue and marginal cost

120 - 0.4Q = 10 + 0.6Q

110 = Q

P = 120 - 0.2Q

P = 120 - 0.2 * 110

P = $ 98

Profit = ( 120 - 0.2Q)Q - [ 20 + 10Q + 0.3Q2 ]

Profit = 120 * 110 - 0.2 * 1102 - 20 - 10 * 110 - 0.3 * 1102

Profit = $ 6,030

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