(a) Complete the following table which summarizes the weekly sales and cost situ
ID: 1258893 • Letter: #
Question
(a) Complete the following table which summarizes the weekly sales and cost situation confronting a monopolist:
Average TotalCost
(c) At what rate of output is total revenue maximized within this range? (Choose the highest level.)
(d) What are the values of MR and MC at the revenue-maximizing rate of output?
MR = $
MC = $
(e) At what rate of output are profits maximized? (Choose the highest level.)
(f) What are the values of MR and MC at the profit-maximizing rate of output?
MR = $
MC = $
(g) What are total profits at that output rate?
(h) If a competitive industry confronted the same demand and costs, how much output would it produce in the short run? (Enter the closest whole unit of output.)
Price QuantityDemanded Total Revenue MarginalRevenue Total Cost MarginalCost
Average TotalCost
$22 0 $ $ --- $ 4 $ -- $ --- 20 1 $ $ 8 $ $ 18 2 $ $ 13 $ $ 16 3 $ $ 19 $ $ 14 4 $ $ 27 $ $ 12 5 $ $ 37 $ $ 10 6 $ $ 51 $ $ 8 7 $ $ 69 $ $Explanation / Answer
a. The required table is as below:
Price P
Quantity Demanded Q
Total
Revenue
P×Q
Marginal Revenue
Total Cost
Marginal
Cost
Average Total Cost
$22
0
$0
$ ---
$ 4
$ --
$ ---
20
1
$20
$20
8
$4
$8
18
2
$36
$16
13
$5
$6.5
16
3
$48
$12
19
$6
$6.33
14
4
$56
$8
27
$8
$6.75
12
5
$60
$4
37
$10
$7.4
10
6
$60
$0
51
$14
$8.5
8
7
$56
-$4
69
$18
$9.85
c. The maximum total revenue is $60. It reflects for the output level 5 and 6. Therefore, the required output level is 5 and 6.
d. Marginal revenue (MR) = $0
Marginal cost (MC) = $14
e. Profits would be maximum where MR = MC. This is in the output level 4.
f. MR = $8
MC = $8
Price P
Quantity Demanded Q
Total
Revenue
P×Q
Marginal Revenue
Total Cost
Marginal
Cost
Average Total Cost
$22
0
$0
$ ---
$ 4
$ --
$ ---
20
1
$20
$20
8
$4
$8
18
2
$36
$16
13
$5
$6.5
16
3
$48
$12
19
$6
$6.33
14
4
$56
$8
27
$8
$6.75
12
5
$60
$4
37
$10
$7.4
10
6
$60
$0
51
$14
$8.5
8
7
$56
-$4
69
$18
$9.85
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