Question: A monopolist's demand curve and total costs are given by:
Q is the quantity demanded at each price P, TC is total cost, TR is total revenue, MR is marginal revenue, MC is marginal cost, and π is profit. Fill in all the blanks and determine the optimal output and price.
a. If marginal cost falls by $5, find the new profit-maximizing output.
b. Since the firm is a monopolist and can set any price it wants, why does price fall at all?