Question

Chs. 14 and 15 (Monopolistic Co.. The Table belows shows data pertaining to a monopolist. Use the table to answer the following questions Total Marginal Total Cost Cost Marginal Price S Quantity Revenue Revenuec MC $ TR $ MR $ $50 75 100 125 $10 8 7 6 5 4 15 20 25 30 35 40 45 eBook 150 175 200 225

Answer 1

ANSWER :-

(A)

Price ($)	Quantity	Total Revenue	Marginal Revenue (MR)	MR ($)	Total Cost ($)	Marginal Cost (MC)	MC ($)
10	10	100	-		50
9	15	135	(135-100 / 15-10)	7	75	(75-50 / 15-10)	5
8	20	160	(160-135 / 20-15)	5	100	(100-75 / 20-15)	5
7	25	175	(175-160 / 25-20)	3	125	(125-100 / 25-20)	5
6	30	180	(180-175/30-25)	1	150	(150-125/30-25)	5
5	35	175	( 175-180/35-30 )	-1	175	(175-150/35-30)	5
4	40	160	(160-175/40-35)	-3	200	(200-175/40-35)	5
3	45	135	(135-160/45-40)	-5	225	(225-200/45-40)	5

(C) A monopoly maximizes profit by producing at the point.

   MR=MC.

From the above table it can be seen that profit maximizing quantity Q* = 20,

MR = MC = 5.

When Q* = 20,

P* = $8

(D) At the profit maximizing output level of 20 units, Profit = TR - TC

= $(160 - 100)

= $60.

(E) Revenue maximizing quantity is 30 units because at that Quantity, TR is maximum.

(F) revenue maximizing price = $6

(G) profit when revenue is maximized = TR - TC

= $(180 - 150)

= $30

(H) If the market is perfectly competitive, then to maximize profit, the firm will be producing at the point where price = MC. In that case, competitive Quantity is 35 units because at that quantity,

price = MC = $5.

   Competitive price = $5.

(I) The profit that the competitive industry will earn   = TR - TC

  =$(175 - 175)

  The profit that the competitive industry will earn = $0

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