Question

Use the cost and revenue data to answer the questions.

Quantity	Price	Total revenue	Total cost
1010	9090	900900	675675
1515	8080	12001200	825825
2020	7070	14001400	10251025
2525	6060	15001500	12501250
3030	5050	15001500	15001500
3535	4040	14001400	18501850

If the firm is a monopoly, what is marginal revenue when quantity is 2525 ?

MR = $

Not a valid number

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x10^y

What is marginal cost when quantity is 1515 ?

MC = $

Not a valid number

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x10^y

If this firm is a monopoly, at what quantity will marginal profit be $0.00?

quantity =

Not a valid number

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x10^y

If this is a perfectly competitive market, which quantity will be produced?

quantity =

Not a valid number

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x10^y

Comparing monopoly to perfect competition, which of the statements are true? Select all that apply.

The monopoly is likely to be less responsive to consumers.

The perfectly competitive market's ouput is lower.

The monopoly's price is higher.

Answer 1

Marginal Revenue can be calculated using the following formula

Similarly we can calculate MC

Refer the attached picture below

1. When Q = 25

Marginal revenue, MR = 20

2. When Q = 15

Marginal cost, MC = 30

3. Quantity where Marginal Profit = $ 0

It will be that point where MR = MC

When Q = 20 units

MR = MC

Hence, Marginal profit = $ 0

4. If it is a perfectly competitive firm then the output will be up to the point where P = MC

Output under perfect competition = 30 units

5. The monopoly is likely to be less responsive to consumers.

Monopoly price is higher

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