The following are the demand and total cost schedule for company town water comp

Question

The following are the demand and total cost schedule for company town water company, a local monopoly. How much output will company town produce, and what price will it charge? will it earn a profit? How much? 7. Answer the question based on the accompanying graph for a monopolist. a. If the firm is a profit maximizer, how much will it produce? b. What price output will the monopolist charge? C. How much profit will this firm realize? d. if the firm were to behave as a pefect competitor how much will it produce?

Explanation / Answer

Output MR MC

50,000 5500 3000

100,000 5000 3500

150,000 4500 4500

200,000 4000 5000

250,000 3500 7000

300,000 2500 9000

So , MR = MC , for Q = 150,000 and P = 0.09

So firm will chare price = $0.09 and Produce 150,000 units

Yes it will earn a profit

Profit = TR - TC = P*Q - TC

= 13,500 - 11,000

= 2,500

7.

a. Q =200

b. P = $14

c. (14-10)*200 = $800

d. Q will be where MC intersects Demand(D) , which is aproximately = 300

If you don't understand anything then comment , I'ill revert back on the same. :)

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