Question

The table below shows the costs and demand for the clove oil industry. Total Revenue Marginal Revenue Marginal Cost Total Cost Total Profit/Loss Quantity Price 136 162 190 a. Complete the table above. b. If this industry was perfectly competitive, what would be the output, price, and total industry profit/loss? Output: Price: $0 Profit/loss: $ c. If this industry was a monopoly industry, what would be the output, price, and total industry profit/loss? Output: O Price: $0 Profit/loss: $0

Answer 1

TC TR I PXG MR Thu-TRA-I MC TEN-TGN- TlLoss' TR-TC 27 - 4 26 26 26 26 2 23 27 +1 2 3 25 24 50 72 24 22 + +2 u 23 zot 5 22** 6 21 7 20 8 19 110 126 1 140 - 152 1 18 16 14 12 22 49 21 70 zot 90 22** 112 14 136 26 162 28 190 -2 -10 -22 -38 (b) PERFECT COMPETITION Profit maximizing condition : Price =Marginal costeMC) At quantity=5 units, price=5 ; & Mc=5 Thus, output= 5 units Price = 22$ Profit, Loss = -2 (c) MONOPOLY INDUSTRY profit maximizing condition : MR = MC At quantity = 4 units, MR = 20 and MC=20. Thus, output = 4 units Price = $23 Profit/Loss - 2