Question

3. Use the graph of a mmonopoly firm below to answer questtions a- 4 aso 545 Isas MC ts3o is25 ATC s20 S15 iS10 ss Quantity 500 MR so 4b0 332 360 300 200 240 100 units of Q a) To maximize revenue firm A should produce b) What price can firm A charge if it produced 150 units of output? S c) Firm A's total revenue at 200 units of output is $ d) Firm A's total cost at 150 units of output is $ e) Firm A's total profit at 300 units of output is $ Firm A would make an economic profit/normal profit/a loss if it produced 250 units of output g) Firm A's per unit profit at 200 units of output is $

Answer 1

Answer

A. 200 units

Explanation :

Monopoly firm can maximise its profit by producing where the MR = MC. Here the MR And MC are equals at 200 units.

B. $35.

Explanation

If firm wants to produce 150 unit, firm will charge $35. Becouse firm decides price on demand curve and at 150 unit demand curve has $35.

C.$6000

Explanation:

TR =p*q

Here the price is 30 at 200 units

So TR=30*200

=$6000.

D. $4125

Explanation

Total cost = ATC*QUANTITY.

Here at 150 quantity the average total cost is 27.5.

So. Total cost =ATC*Q

=27.5*150

=$4125.

E. Zero

Explanation :

Profit =total revenue - total cost

=(300*20)-(300*20)

=0

Total revenue can be calculated by price multiple by quantity.. Here at 300 quantity on demand curve price is 20.

Total cost can be find by multiplying ATC *Q. Here at 300 quantity ATC is 20 on atc curve.

F. normal profit.

Explanation :

Here at 250 unit price is higher than the average total cost. So it can be make a normal profit or economic profit too.

G. $1500

Explanation :

Profit = total revenue - total cost.

=(30*200)-(22.5*200)

=6000-4500

=1500.