Question

The monopolist represented in the table has a marginal cost equal to $4 times the amount produced. The producer surplus would equal ______ at the profit-maximizing level of output. Question 4 options: a) $243 b) $162 c) $405 d) $405

$q113-1.png?_&d2lSessionVal=BOEUNuFxdawUr$

Answer 1

Answer

TR=P*Q,

TR(0)=0*90=0,

TR(3)=3*81=243 and so on

========

MR(n)=(TR(n)-TR(p))/(n-p)
MR(n)= MR of n th unit of output
TR(n)=TR of n units of output
TR(p)=TR of p units of output
it is true for n>p
MR(3)=(243-0)/3=81 and so on

Q	P	TR	MR
0	90	0
3	81	243	81
6	72	432	63
9	63	567	45
12	54	648	27
15	45	675	9
18	36	648	-9
21	27	567	-27
24	18	432	-45
27	9	243	-63
30	0	0	-81

the firm produces at MR=MC or the nearest lower MC

MR=9 and MC=4 where Q=15 units

P=$45

Producer surplus is the area above MC and below the price

=(P-MC)*Q

=(45-4)*15

=615

the producer surplus is $615

None of the options is correct