Question

Chapter 11 1. You are a self-employed profit-maximization consultant specializing in monopolies. Five single-price, profit-maximizing monopolies are currently seeking your advice, and al- though the information they have supplied to you is incomplete, your expert knowledge allows you to go back and make a definite recommendation in each case. Select one of the following recommendations for each firm in the short run: a. Remain at the current output level. b. Increase output. c. Reduce output. d. Shut down. e. Go back and recalculate your figures because the ones supplied can't possibly be right! TR Firm P A MR 3.00 3.90 5.90 TC MC ATC AVC Your recommendation 2000 7400 2.90 3.24 10000 5.90 4.74 4.24 4000 9.00 11.90 10.74 5000 37.90 35.90 9.00 44000 37.90 D 35.90 E 35.00 3990 1000 3300 at min value 23.94 2. A monopolist has a demand curve given by P - 100 - and a total cost curve given by TC-16 + Ol. The associated marginal cost curve is MC-20. Find the monopo list's profit maximiring quantity and price. How much economic profit will the mo- nopolist earn? 3. Now suppose the monopolistin Problem 2 has a total cost curve given by TC The corresponding marginal cost surveill u have acer o

Answer 1

As per HomeworkLib guidelines in case of multiple questions only the first question is to be attempted

Kindly ask rest of the questions in a separate post

1.

Firm A: Increase output (as MR > MC and output can be increased to maximize profits)

Firm B: Remain at the current output (as P = MC and thus profits are being maximized)

Firm C: Reduce output (as TR of 44000 is less than TC of 11.9*4000 = 47600)

Firm D: Remain at current output (as MR = MC)

Firm E: Remain at current output (as TR-TC is positive and ATC is at its minimum)