9780073511443 Suppose a pure monopolist .s being faced with the demand schedule

Question

9780073511443 Suppose a pure monopolist .s being faced with the demand schedule shown below on the right. It also has the cost structure shown below on the left. Calculate the missing total revenue and marginal revenue amounts for different price levels as well as total costs for all levels of production. What are the profit-maximizing price and profit-maximizing output for this monopolist? If MR = MC point couldn't be found then production is continued until MC le MR (oil units which qualify for this rule ore being produced and units for which MC>MR ore not being produced). Calculate the monopolist's profit per unit at the profit maximizing price (show your work):

Explanation / Answer

For profit maximisation MC=MR , but in this case when MR>MC then number of units will be only 1 and 2 because only they qualify for the same. But if the firm is not able to earn higher MR then the condition falls to MC >MR all the units post 2 follow . This means that the firm is producing more at a higher MC but not earning economic profits .

Profit =TR-TC ,hence the profit maximises at unit 7 for a price of $ 173 .

Related Questions

Navigate

• Browse (All)
• Browse 9
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.