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12 June, 03:17

Suppose that a price-searcher monopolist had a total cost function given by: TC = 10 + Q + 0.1Q2. The demand for the price searcher's product is given by: QD = 50-10P. Calculate the monopolist's producer surplus. (Do not include a dollar sign in your response. Round to the nearest two decimals.)

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  1. 12 June, 03:38
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    The monopolist's producer surplus is $20.

    Explanation:

    TC = 10 + Q + 0.1Q^2

    MC = 1 + 0.2Q

    Q = 50 - 10P

    10P = 50 - Q

    P = 5 - 0.1Q

    TR = PQ

    = 5Q - 0.1Q^2

    MR = 5 - 0.2Q

    for:

    MR = MC

    5 - 0.2Q = 1 + 0.2Q

    4 = 0.4Q

    Q = 10

    P = 5 - 0.1 (10) = 4

    at Q = 10,

    MC = 1 + 0.2*10

    = 3

    P. S = (4 - 3) * 10 + 1/2*10 * (3 - 1)

    = 10 + 10

    = $20

    Therefore, The monopolist's producer surplus is $20.
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