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3. You own a monopoly business and have collected the following information about the demand for your product. $10 0 $8100 $6200 $4400 $2 500 $0700 (a) Use this information to construct the MR (marginal revenue) schedule in your writing booklet. (2 marks) (b) Suppose it costs zero for zero output, $200 for 100 units, $500 for 200 units, $1,100 for 400 units, and the marginal cost is $5 per unit for any quantity above 400 units. Use this information to construct the marginal cost schedule in your writing booklet. (2 marks) (c) Use MARGINAL ANALYSIS to decide on a price and quantity to produce Explain why you dont produce anymore than what you have chosen (2 marks) (d) Could a subsidy or a tax increase efficiency? Explain what level of tax or subsidy would generate an efficient outcome (3 marks) (e) If a new technology were to lower the marginal cost of production, then how much would the marginal cost have to fall before you would increase output? (1 marks)

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Answer Total Revenue Marginal revenue 10 0 100 200 400 500 700 0 800 1200 1600 1000 0 6 4 4 6 0 Total Costs Marginal Costs 0 200 500 1100 1600 2100 2.5 Part C Monopoly produces using MR MC condition so P 6 and Q = 200

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