00:01
Let's go over this question.
00:02
What is the price and output if the manager set price equal to marginal cost? so we have the total cost function.
00:14
So this is before they're going to collude.
00:22
So we're just going to work with the cost function given.
00:30
To find marginal cost, we need to find a derivative of this function.
00:45
So we want the price and output if they set the price equal to the marginal cost.
00:51
So we're given the demand curve.
00:54
So the price is set equal to marginal cost.
01:01
Therefore, we can substitute.
01:30
So the quantity is going to be 85.
01:33
And price is going to be equal to marginal cost.
02:02
Now this is in tens of thousands of dollars.
02:07
So we multiply by 10 ,000.
02:14
What are the profit maximizing price and output if they collude and act like a monopolist? so in a monopoly, profit is maximized when marginal revenue is equal to marginal cost.
02:41
So marginal revenue is equal to the derivative of total revenue.
02:48
And therefore, we first need to find total revenue.
02:52
Total revenue is equal to the price times the quantity.
02:55
We know that the price is defined by the demand curve.
02:59
So plug in 100 minus q per p and then multiply that by q...