1. In the following table are demand and cost data for a pure monopolist. Comple
ID: 1219628 • Letter: 1
Question
1. In the following table are demand and cost data for a pure monopolist. Complete the table by filling in the columns for total revenue, marginal revenue, and marginal cost. Answer these three questions: (a) What output will the monopolist produce? (b) What price will the monopolist charge? (c) What total profit will the monopolist receive at the profit-maximizing level of output?
Total Marginal Total Marginal
Quantity Price revenue revenue cost cost
0 $34 $______ $ 20
1 32 ______ $______ 36 $______
2 30 ______ ______ 46 ______
3 28 ______ ______ 50 ______
4 26 ______ ______ 54 ______
5 24 ______ ______ 56 ______
6 22 ______ ______ 64 ______
7 20 ______ ______ 80 ______
8 18 ______ ______ 100 ______
9 16 ______ ______ 128 ______
10 14 ______ ______ 160 ______
Explanation / Answer
Marginal Cost (MC) = change in total cost divided by change in quantity
Marginal Revenue (MR) = change in total revenue divided by change in quantity
Marginal Cost Quantity (Q) Price(P) Total Revenue (P * Q) Marginal Revenue Total Cost - 0 34 0 - 20 16 1 32 32 32 36 10 2 30 60 28 46 4 3 28 84 24 50 4 4 26 104 20 54 2 5 24 120 16 56 8 6 22 132 12 64 16 7 20 140 8 80 20 8 18 144 4 100 28 9 16 144 0 128 32 10 14 140 -4 160Related Questions
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