Only and Only Inc. is a monopolist. The demand function for the product is estimated to be

Q= 60-0.4P+6Y+2A, where

Q= quantity of units sold, P= price/unit, Y= per capita disposable personal income, A= advertisement expenditure.

The firms Average Variable Cost is given by

AVC = Q2-10Q+60

Y=3 and A=3 for the period under study.

If fixed costs = Rs. 1000, derive the firms total and marginal cost functions

Derive total revenue and marginal revenue functions for the firm

Calculate the profit maximising level of price and output

What profit or loss will One and Only earn?

If fixed costs were Rs. 1,200, how would the answers change for (a) through (d)?

Answer: Q= 60-0.4P+6Y+2A, where Y=3 and A=3 therefore, Q=60-0.4P+6*3+2*3 0.4P= 60+18+6-Q P=210-Q/0.4 AVC = Q2-10Q+60 total cost(TC)=FC+VC Answer:1)TC=1000+Q3-10QQ+60Q MC=dTC/dQ=3Q2-20Q+60 Answer:2) TR=PQ=210Q-QQ/0.4 MR=dTR/dQ=210-5Q Answer:3) for profit maximization MR=MC, therefore 210-5Q=3QQ-20Q+60 150=3QQ-15Q QQ-3Q-50=0 Q=8.7…

10-Q/0.4=210-8.7/0.4=188.25 Profit=PQ-TC=188.25*8.7-1000-8.7*8.7*8.7+10*8.7*8.7-60*8.7=1061.37 when FC=1200, TC=1200+Q3-10QQ+60Q MC=dTC/dQ=3QQ-10Q+60 Profit=PQ-TC profit=188.25*8.7-1200-8.7*8.7*8.7+10*8.7*8.7-60*8.7=861.37