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Suppose that Intel has a monopoly in the market for microprocessors in Brazil. During the year...

Suppose that Intel has a monopoly in the market for microprocessors in Brazil. During the year 2005, it faces a market demand curve given by P = 9 - Q, where Q is millions of microprocessors sold per year. Suppose you know nothing about Intel’s costs of production. Assuming that Intel acts as a profit-maximizing monopolist, would it ever sell 7 million microprocessors in Brazil in 2005?

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Answer #1

No

Bcoz in monopoly at eqm, MR = MC

MR = 9-2Q

Then even if MC = 0

Then, MR = 0

9-2Q= 0

Q* = 4.5

thus a profit maximizing Monopolist would at most sell 4.5 million , & never 7 million

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