McComby Inc. is a monopolist producing and selling a product whose demand is P=
ID: 1249513 • Letter: M
Question
McComby Inc. is a monopolist producing and selling a product whose demand is P= 250-6Q. The total cost of production is TC=100+34 Q + 3 Q 2, and the marginal cost of production is MC= 34+6Q.
In order to maximize profits, McComby Inc. should produce
A. Q=8.
B. Q=12.
C. Q=18.
D. None of the above.
— The profit-maximizing uniform price per unit for McComby Inc. is
A. P=$140.
B. P=$106.
C. P=$178.
D. None of the above.
— If McComby were able to practice first degree price discrimination, then
A. Its total cost would be $1684.
B. It would produce and sell more than under uniform pricing.
C. The last unit would be sold at a price equal to its marginal cost of production.
D. All of the above.
Explanation / Answer
MR = MC
250 - 12Q = 34 + 6Q
216 = 18Q
Q* = 12
B. Q=12
Plug this into P
P = 250 - 6(12)
P* = 178
C. P=$178
D. All of the above