Suppose a pure monopolist is faced with the cost data shown in the table on the

Question

Suppose a pure monopolist is faced with the cost data shown in the table on the left and the demand schedule shown on the right. Calculate the missing total-revenue and marginal-revenue amounts. Instructions: Enter your answers as whole numbers in the gray-shaded cells. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. What is the profit-maximizing price? $ What is the profit-maximizing output for this monopolist? units What is the monopolist's profit?

Explanation / Answer

1. Total revenue = price * quantity.

Marginal revenue = change in TR/change in quantity.

b. The profit maximising level of output is where the MR = MC. The nearest value where these two are equal is at 4 units.

Price = $63.

c. profit = revenue - cost

Profit = 252 - 210 = $42.

quantity price total revenue marginal revenue 0 115 0 nil 1 100 100 100 2 83 166 66 3 71 213 47 4 63 252 39 5 55 275 23 6 48 288 13 7 42 294 6 8 37 296 2 9 33 297 1 10 29 290 -7

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