And indicate whether you feel this table better represents data from perf. comp. firm or a monopoly.
Homework Answers
TC = FC + VC
MC = Change in TC / Change in Q
TR = P * Q
MR = Change in TR / Change in Q
| P | Q | FC | VC | TC | MC | TR | MR |
| 7 | 0 | 10 | 0 | 10 | 0 | ||
| 7 | 1 | 10 | 1 | 11 | 1 | 7 | 7 |
| 7 | 2 | 10 | 3 | 13 | 2 | 14 | 7 |
| 7 | 3 | 10 | 7 | 17 | 4 | 21 | 7 |
| 7 | 4 | 10 | 13 | 23 | 6 | 28 | 7 |
| 7 | 5 | 10 | 21 | 31 | 8 | 35 | 7 |
| 7 | 6 | 10 | 31 | 41 | 10 | 42 | 7 |
Setting P = MC for profit maximization, from table we see P is not equal to MC for any quantity so we select the quantity for which MC is just below P
Here we select Q = 4 for profit maximization
This data represents data from a perfect competitive firm because demand faced is constant
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