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Suppose you run a manufacturing business that is involved in manufacturing and selling a single product. The fixed cost to run the business is $15,000 and the constant marginal cost is $7.50 per unit. The sale price of your product is $15 per unit.
(a) Find the revenue function, total cost function and profit function. (Let x be the output level)
(b) Using the functions in part (a), find the breakeven point.
(c) State the condition(s) under which you can make a profit
Suppose a potential entrant is considering entering, but the monopolist has a cost advantage in that the MC for the potential entrants is: MCe = ACe = 50. Assume that the monopolist continues to maximize his profits, solve for the residual demand cur..
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