sis 2013 doubt

[manisha]

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[manisha]

monopolist has constant marginal costs at Re 1 per unit, and zero fixed costs. It faces

the demand curve D(p) = 100/p, p < 20 where p is price.
0, p > 20
What is the profit maximizing choice of output?
(a) 20
(b) 5
(c) 1/99
(d) 10

[Akshay Jain]

case 1..if Q=20 then P=5 acc to demand function
(TR)Total revenue=100 and (TC)Total cost is 20
(NP)Net Profit=100-20=80
case 2..if Q=5 then P=20
TR=100, TC=5
NP=95
case 3..if Q= 1/99 then P>20 (not possible coz of constraint on demand function if P>20 then Q=0)
case 4...if Q=10 then P=10
TR=100, TC= 10
NP=90

clearly profit is maximized at Q=5
note dat in some questions u just hav to play vd the options given...standard teqniqs may not work...

[manisha]

thanks a ton akshay