A monopoly faces the demand curve P = 12 - 1.0Q,
A monopoly faces the demand curve
P = 12 - 1.0Q,
where P is measured in dollars per unit and Q in thousands of units. The monopolist has a constant average cost of $4.00 per unit.
Draw the average and marginal revenue curves and the average and marginal cost curves.
1.) Using the line drawing tool, draw the average revenue curve and label it 'AR'.
2.) Using the line drawing tool, draw the marginal revenue curve and label it 'MR'.
3.) Using the line drawing tool, draw the average cost curve and label it 'AC'.
4.) Using the line drawing tool, draw the marginal cost curve and label it 'MC'.
Carefully follow the instructions above, and only draw the required objects.
What are the monopolist's profit-maximizing price and quantity?
The monopoly's profit-maximizing quantity is $_______ thousand units.
Homework Answers
The diagram is correct
Profit maximization occurs at MR=MC
Profit maximizing quantity is $4 thousand units
Profit maximizing price is $8
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Suppose a firm is a monopoly. Its marginal cost curve is flat,
and its average cost curve is downward sloping (because it has a
fixed cost).
1.) Using the point drawing
tool,
indicate the monopoly's profit-maximizing price and quantity in
the figure if it cannot price discriminate. Label this point
'e 1e1.'
2.) Using the rectangle drawing
tool,
indicate the monopoly's losses at the no price discrimination
profit-maximizing price and quantity. Label this rectangle
'Losses 1Losses1.'
3.) Using the point...
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