A natural monopolist faces the following demand: P = 715 - 7Q The monopolist has the following...

Question:

A natural monopolist faces the following demand:

{eq}P = 715 - 7Q {/eq}

The monopolist has the following cost function:

{eq}C = 319Q + 736 {/eq}

How much output will this firm produce to maximize profit? Round our answer to one decimal place.

Monopoly's Profit Maximization:

A monopoly is a firm that is the sole seller of a certain product in the market. The product produced by a monopoly is unique and has no close substitutes. This means that the monopoly does not face any competition from other firms. Therefore, monopolies have the ability to set a price for its product and also have the exclusive control of the quantity supplied in the market.

Answer and Explanation:

Monopoly firms maximize profits at the point where the marginal revenue is equal to their marginal cost of production. That is:

{eq}MR = MC {/eq}

T...

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What is a Monopoly in Economics? - Definition & Impact on Consumers

from Economics 101: Principles of Microeconomics

Chapter 7 / Lesson 2
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