Suppose a pure monopolist is faced with the cost data shown in the table on the

Question

Suppose a pure monopolist is faced with the cost data shown in the table on the left and the demand schedule shown on the right. a. Calculate the missing total-revenue and marginal-revenue amounts Instructions: Enter your answers as whole numbers in the gray-shaded cells. If you are entering any negative numbers be sure to Include a negative sign ) in front of those numbers. Production and Costs Demand Total Average FixedAverageAverage Total |Marginal Variable Cost Quantity Demanded Revenue Marginal Revenue Cost 0.00 $115 100 $ 100 00S 1000 $45.00 42.50 40.00 37.50 37.00 37.50 38.57 40.63 43 33 46 50 $105.00 7250 80 00 5250 49.00 $45 1 S60 00 30.00 20.00 15.00 12.00 10.00 8 57 7.50 6 67 6 00 S 166.00S $ 213.00$ $ 25200$ S 275.00S $ 288.00S $ 294.00$ 66 00 47.00 3900 23.00 71 35 30 35 63 47 50404 47.14 48 13 50 00 52.50 6.00 2.00 1.00 7.00 37 296.00 $ 297.00$ $ 29000 65 75 10 10 b. What is the profit-maximizing price? What is the profit-maximizing output for this monopolist? units c. What is the monopolist's profit?

Explanation / Answer

B.

$63 is the profit maximizing price, because, afterwards, the marginal cost exceeds marginal revenue.

Profit maximizing output = 4 units

C.

Monopolist’s profit = Total revenue – total cost = 252 - 4*52.5

Monopolist’s profit = $42

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