Question

Sal's Rare Roses is a single price monopoly. The table shows the demand schedule for Sal's Rare Roses (columns 1 and 2) and the firm's total cost schedule (columns 2 and 3) What is Sal's maximizing output, price, and economic profit?

Price (dollars per bush)	Quantity (bushes per hour)	Total Cost (dollars per hour)
12	0	1
11	1	6
10	2	13
9	3	22
8	4	33
7	5	46

Answer 1

P	Q	TC	TR	MC	MR
12	0	1	0
11	1	6	11	5	11
10	2	13	20	7	9
9	3	22	27	9	7
8	4	33	32	11	5
7	5	46	35	13	3

TR=P*Q

MC=Change in TC/change in Q

MR=Change in TR/change in Q

The monopoly firm will set MC=MR for profit maximization

Output = 2 units

Price = 10

Profits = TR-TC = 20-13 = 7