Price Quantity demanded Total revenue Marginal revenue $150 0 0 135 1 135 135 11
ID: 1251315 • Letter: P
Question
Price Quantity demanded Total revenue Marginal revenue$150 0 0
135 1 135 135
118 2 236 101
106 3 318 82
98 4 392 74
90 5 450 58
83 6 498 48
77 7 539 41
72 8 576 37
68 9 612 36
64 10 640 28
Total Product : 0 1, 2, 3, 4, 5, 6, 7, 8, 9, 10
Average Fixed Cost: 60, 30, 20, 15, 12, 10, 8.57, 7.5, 6.67, 6
Average Variab.Cost: 45, 42.5, 40, 37.5, 37, 37.5, 38.57, 40.63, 43.33, 46.50
Average Total Cost: 105, 72.5, 60, 52.5, 49, 47.5, 47.14, 48.13, 50, 52.5
marginal Cost: 45 40 35 30 35 40 45 55 65 75
A/ What is the monopolist’s profit? $ Explain why?
B/ Profit-maximizing Q (quantity) =? TR= ? And TC= ? Explain Why
Explanation / Answer
A) Since the Monopolist is the only firm in the market, he/she will produce at the level of profit maximization (MC=MR). However, MR and MC don't cross at an exact level of output. So we'll have to profit maximize the two and see which is greater. Q MR MC Price ATC Profit per Unit (price - ATC) 6 48 40 83 47.50 $35.50 7 41 45 77 47.14 $29.86 Since the profit per unit is greater at Q=6 and it's the closest quantity to profit maximization (MC=MR), the monopolist will produce at this point. The monopolist profit will be Profit per unit x Q = $35.50 x 6 = $213 profit B) Profit maximizing Q = 6. At Q = 6, TR = P x Q = $83 x 6 = $498 At Q = 6, TC = ATC x Q = $47.50 x 6 = $285
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