Now consider a monopolist in the market for a patent-protected energy drink. Giv

ID: 1191634 • Letter: N

Question

Now consider a monopolist in the market for a patent-protected energy drink. Given the following demand schedule, please calculate total revenue and marginal revenue at each of the prices listed in the schedule.

Product Quantity Total Marginal

Price Demanded Revenue Revenue

($) (drinks) ($) ($/drink)

$10.00 0 0

_____

$ 8.00 30 _____

_____

$ 6.00 60 _____

_____

$ 4.00 90 _____

_____

$ 2.00 120 _____

_____

$ 0.00 150 _____

(4 points) Had our market been in perfect competition, what would the equilibrium price and quantity have been?

__________________________________________________________________

Explanation / Answer

Total revenue is calculated by multiplying price and quantity. The calculation of Marginal revenue is shown below.

Without any information on Marginal cost, the equilibrium price and quantity cannot be determined. But assuming that the marginal cost is $0 and the market is perfectly competitive, the equilibrium price will equal the marginal cost. That is, the equilibrium price will be zero. The quantity corresponding to the equilibrium price is 150 units. Therefore, equilibrium corresponsing quantity will be 150 units.

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Now consider a monopolist in the market for a patent-protected energy drink. Giv

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