Posted: January 14th, 2017

# 1: The Madison Corporation, a monopolist’s report from a consulting firm

## The Madison Corporation

The Madison Corporation, a monopolist, received a report from a consulting firm concluding that the demand function for its product is:
Q + 78 1.1P + 2.3Y + 0.9A
where Q is the number of units sold, P is the price of its product (in dollars), Y is per capita income (in thousands of dollars), and A is the firm s advertising expenditure (in thousands of dollars). The firm s average variable cost function is:
AVC + 42 8Q + 1.5Q2
where AVC is average variable cost (in dollars).

a. Can one determine the firm s marginal cost curve?
b. Can one determine the firm s marginal revenue curve?
c. If per capita income is \$4,000 and advertising expenditure is \$200,000, can one determine the price and output where marginal revenue equals marginal cost? If so, what are they?

### Expert paper writers are just a few clicks away

Place an order in 3 easy steps. Takes less than 5 mins.

## Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
\$0.00