Single-Price Monopolist. Can I get some help starting at question 13? Thank you!

Question

Single-Price Monopolist. Can I get some help starting at question 13? Thank you!

f) What is Dawn's average total cost (ATC) and marginal cost (MC)? g) What is the profit of Dawn's? h) If all of the other donut stores in this perfectly competitive market in DC have identical cost curves and behave exactly like Dawn's Donuts, how many donut stores will there be in long-run equilibrium? Chapter 13: 1. Consider the following picture of a single-price monopolist's cost curves: MC 12 ATC 10 MR 22242 Units of output

Explanation / Answer

13. 1. a ) Ans: 11

13. 1. b ) Ans: 22 units

Explanation :

Profit maximization condition for monoploist is where , MC = MR

13. 1. c ) Ans: 88

Explanation :

Total profit = Total revenue - Total cost

= { (Price * Quantity) - (ATC * Quantity) }

= { 11 * 22 ) - ( 7 * 22 )

= 242 - 154

= 88

13.2. a ) Ans:

Note :

Total Revenue = Price per unit * Total quantity demanded

Marginal Revenue = Change in total revenue / change in Quantity

Price Quantity Demanded Total Revenue Marginal Revenue 12 0 0 0 11 1 11 11 10 2 20 9 9 3 27 7 8 4 32 5 7 5 35 3 6 6 36 1 5 7 35 -1

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