Homework Answers
(a)
| P | Q | TR=(P)(Q) | MR= Change in TR |
| 10 | 0 | 0 | - |
| 9 | 1 | 9 | 9 |
| 8 | 2 | 16 | 7 |
| 7 | 3 | 21 | 5 |
| 6 | 4 | 24 | 3 |
| 5 | 5 | 25 | 1 |
| 4 | 6 | 24 | -1 |
| 3 | 7 | 21 | -3 |
| 2 | 8 | 16 | -5 |
| 1 | 9 | 9 | -7 |
| 0 | 10 | 0 | -9 |
(b) At 6 units of output , marginal revenue turns negative.
(c) When Q=3 units, then P=$7. Total revenue = $21
When Q=4 ,then P=$6 . Total revenue = $24
Price effect = $(7-6)(3)= $1
Quantity effect = (4-3)($6)= $6
Because quantity effect is greater than price effect , this means total revenue would increase.
(d) MC =$2, Profit maximizing condition under monopoly is MR=MC.
We can see when ,Q=4 , MR>MC and when Q=5 ,MR<MC. So, the profit maximizing level of output = 4 units.
(e) At this output level , monopolist will charge $6 .
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A: $4
B: $5
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revenue?
A: 1
B: 2
C: 3
D: 4
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