Question

5A

Let's suppose that a monopoly firm faces the following demand curve and costs: At a price of $25, it sells 4,000 products. At a price of $24, it sells 4,200 products. At a price of $23, it sells 4,400 products. At a price of $22, it sells 4,600 products. At a price of $21, it sells 4,800 products. At a price of $20, it sells 5,000 products. What are the values for marginal revenue respectively for this monopolist?

At output 4,200, marginal revenue is $8. At output 4,400, marginal revenue is $4. At output 4,600, marginal revenue is $0. At output 4,800, marginal revenue is -$12. At output 5,000, marginal revenue is -$14.

At output 4,200, marginal revenue is $1. At output 4,400, marginal revenue is $2. At output 4,600, marginal revenue is $3. At output 4,800, marginal revenue is $4. At output 5,000, marginal revenue is $5.

At output 4,200, marginal revenue is $4. At output 4,400, marginal revenue is $2. At output 4,600, marginal revenue is $0. At output 4,800, marginal revenue is -$2. At output 5,000, marginal revenue is -$4.

At output 4,200, marginal revenue is $2. At output 4,400, marginal revenue is $4. At output 4,600, marginal revenue is $6. At output 4,800, marginal revenue is $8. At output 5,000, marginal revenue is $10.

At output 4,200, marginal revenue is $2. At output 4,400, marginal revenue is $2.50. At output 4,600, marginal revenue is $1.50. At output 4,800, marginal revenue is -$1.50. At output 5,000, marginal revenue is -$2.50.

5B

Output	Price	TR	MR	TC	MC
0	$18	$0	-	$400	-
100	17	1,700	$17	1,900	$15
200	16	3,200	15	2,900	10
300	15	4,500	13	3,500	6
400	14	5,600	11	4,000	5
500	13	6,500	9	4,600	6
600	12	7,200	7	5,350	7.50
700	11	7,700	5	6,150	8
800	10	8,000	3	7,300	13
900	9	8,100	1	9,300	20

Please consider the above table with cost and revenue data for a monopoly firm. The above monopolist will maximize profits at output:

400

200

500

600

Answer 1

5A ) Ans: At output 4,200, marginal revenue is $4. At output 4,400, marginal revenue is $2. At output 4,600, marginal revenue is $0. At output 4,800, marginal revenue is -$2. At output 5,000, marginal revenue is -$4.

Explanation:

Price $)	Output	Total Revenue	Marginal Revenue
25	4000	100000	-
24	4200	100800	4
23	4400	101200	2
22	4600	101200	0
21	4800	100800	-2
20	5000	100000	- 4

TR = Price * Quantity

MR =

5B ) Ans: Monopolist will maximize profits at output 500.

Explanation:

Monopolist profit maximization condition is where MR = MC or MR is greater than MC