1.A medical device company has a monopoly on a certain class of cardiac implants

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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