Q TC 0 300 1 378.227 2 453.016 3 524.529 4 592.928 5 658.375 6 721.032 7 781.061
ID: 1196705 • Letter: Q
Question
Q
TC
0
300
1
378.227
2
453.016
3
524.529
4
592.928
5
658.375
6
721.032
7
781.061
8
838.624
9
893.883
10
947
11
998.137
12
1047.456
13
1095.119
14
1141.288
15
1186.125
16
1229.792
17
1272.451
18
1314.264
19
1355.393
20
1396
21
1436.247
22
1476.296
23
1516.309
24
1556.448
25
1596.875
26
1637.752
27
1679.241
28
1721.504
29
1764.703
30
1809
31
1854.557
32
1901.536
33
1950.099
34
2000.408
35
2052.625
36
2106.912
37
2163.431
38
2222.344
39
2283.813
40
2348
41
2415.067
42
2485.176
43
2558.489
44
2635.168
45
2715.375
46
2799.272
47
2887.021
48
2978.784
49
3074.723
50
3175
51
3279.777
52
3389.216
53
3503.479
54
3622.728
55
3747.125
56
3876.832
57
4012.011
58
4152.824
59
4299.433
60
4452
A monopolist has a Fixed costs (FC) equal to $300, and its total costs (TC) are given in
Table . The (inverse) demand curve it faces in the market is described by this equation:
P = 500 - (10 )Q.
1(a). Derive the MC and ATC values using the equation MC = ^TC/^Q and ATC = TC/Q.
1(b). Draw the MC and ATC curves using the values derived for 1(a). Draw the inverse demand curve and its corresponding MR curve.
Note: for the MR curve, be sure to use
the equation learned in class, MR = a - 2bQ.
1(c). What is the price (PM) and quantity (QM) that the monopolist will choose in order to
maximize profit? What is their total profit from this price and quantity combination?
1(d). What is the consumer surplus when they charge the price PM from 1(c)?
1(e). If the monopolist is able to price-discriminate and charge two different prices, P1 = $200 and P2 = $310, then what is their resulting profitt? What is the consumer surplus under this price-discrimination?
Q
TC
0
300
1
378.227
2
453.016
3
524.529
4
592.928
5
658.375
6
721.032
7
781.061
8
838.624
9
893.883
10
947
11
998.137
12
1047.456
13
1095.119
14
1141.288
15
1186.125
16
1229.792
17
1272.451
18
1314.264
19
1355.393
20
1396
21
1436.247
22
1476.296
23
1516.309
24
1556.448
25
1596.875
26
1637.752
27
1679.241
28
1721.504
29
1764.703
30
1809
31
1854.557
32
1901.536
33
1950.099
34
2000.408
35
2052.625
36
2106.912
37
2163.431
38
2222.344
39
2283.813
40
2348
41
2415.067
42
2485.176
43
2558.489
44
2635.168
45
2715.375
46
2799.272
47
2887.021
48
2978.784
49
3074.723
50
3175
51
3279.777
52
3389.216
53
3503.479
54
3622.728
55
3747.125
56
3876.832
57
4012.011
58
4152.824
59
4299.433
60
4452
Explanation / Answer
a)
b)
c)
now we see that MC=MR is not exactly there in these tables which is necessary for profit maximization but it is nearly equa when Q=23 So at Q=23 P =270 and Total profit = R - TC = 6210 - 1516.309 = 4693.691
d) Consumer surplus = 0.5*(Maximum chargable price = current price)*Q = 0.5*(500-270)*23 = 2695
Q TC MC ATC 0 300.000 1 378.227 78.227 378.227 2 453.016 74.789 226.508 3 524.529 71.513 174.843 4 592.928 68.399 148.232 5 658.375 65.447 131.675 6 721.032 62.657 120.172 7 781.061 60.029 111.580 8 838.624 57.563 104.828 9 893.883 55.259 99.320 10 947.000 53.117 94.700 11 998.137 51.137 90.740 12 1047.456 49.319 87.288 13 1095.119 47.663 84.240 14 1141.288 46.169 81.521 15 1186.125 44.837 79.075 16 1229.792 43.667 76.862 17 1272.451 42.659 74.850 18 1314.264 41.813 73.015 19 1355.393 41.129 71.336 20 1396.000 40.607 69.800 21 1436.247 40.247 68.393 22 1476.296 40.049 67.104 23 1516.309 40.013 65.926 24 1556.448 40.139 64.852 25 1596.875 40.427 63.875 26 1637.752 40.877 62.990 27 1679.241 41.489 62.194 28 1721.504 42.263 61.482 29 1764.703 43.199 60.852 30 1809.000 44.297 60.300 31 1854.557 45.557 59.824 32 1901.536 46.979 59.423 33 1950.099 48.563 59.094 34 2000.408 50.309 58.836 35 2052.625 52.217 58.646 36 2106.912 54.287 58.525 37 2163.431 56.519 58.471 38 2222.344 58.913 58.483 39 2283.813 61.469 58.559 40 2348.000 64.187 58.700 41 2415.067 67.067 58.904 42 2485.176 70.109 59.171 43 2558.489 73.313 59.500 44 2635.168 76.679 59.890 45 2715.375 80.207 60.342 46 2799.272 83.897 60.854 47 2887.021 87.749 61.426 48 2978.784 91.763 62.058 49 3074.723 95.939 62.749 50 3175.000 100.277 63.500 51 3279.777 104.777 64.309 52 3389.216 109.439 65.177 53 3503.479 114.263 66.103 54 3622.728 119.249 67.088 55 3747.125 124.397 68.130 56 3876.832 129.707 69.229 57 4012.011 135.179 70.386 58 4152.824 140.813 71.600 59 4299.433 146.609 72.872 60 4452.000 152.567 74.200Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.