Assume an Unregulated Monopolist with the following demand and cost data. Q P TR
ID: 1146173 • Letter: A
Question
Assume an Unregulated Monopolist with the following demand and cost data.
Q
P
TR
MR
Q
TC
MC
Profit / loss
0
130
0
50
1
120
1
90
2
110
2
120
3
100
3
140
4
90
4
170
5
80
5
210
6
70
6
260
7
60
7
320
8
50
8
390
9
40
9
470
#1) How much should the firm produce in order to maximize profits?
#2) What price will the firm charge?
#3) How much profit or loss does the firm make?
#4) How much would have been produced under Perfect Competition, and at what price?
Hint: Use the MR MC Rule!
Q
P
TR
MR
Q
TC
MC
Profit / loss
0
130
0
50
1
120
1
90
2
110
2
120
3
100
3
140
4
90
4
170
5
80
5
210
6
70
6
260
7
60
7
320
8
50
8
390
9
40
9
470
Explanation / Answer
1) The firm should produce 5 units to maximize profit. At this output level profit is $190.
2) The firm will charge $80
3) The firm will make a profit of $190.
4) Under Perfect Competition, the firm have been produced 5 units and charge $80.
Q P TR= P*Q MR Q TC MC Profit / loss = TR - TC 0 130 0 0 50 -50 1 120 120 120 1 90 40 30 2 110 220 100 2 120 30 100 3 100 300 80 3 140 20 160 4 90 360 60 4 170 30 190 5 80 400 40 5 210 40 190 6 70 420 20 6 260 50 160 7 60 420 0 7 320 60 100 8 50 400 -20 8 390 70 10 9 40 360 -40 9 470 80 -110Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.