Question

3. Model the following monopoly, by filling in the table and graphing your results. Fully labeling your work. Be sure to comment on optimal quantity, price, and profit:

P	Q	TR	TC	MR	MC	AC	π
80	0		80
70	10		100
60	20		140
50	30		200
40	40		300
0	50		450
20	60		700
10	70		1400

Answer 1

Here TR = P * Q

Now MR = change in TR / change in Q and MC = change in TC / change in Q

AC = TC/Q

Profit = TR - TC

In this case Profit is maximized at a quantity of 40 units when MR = MC = 10 and profit is 1300 and the price is $40 per unit

Quantity	Demand	TR	TC	MR	MC	AC	Profit
0	80	0	80				-80
10	70	700	100	70	2	10	600
20	60	1200	140	50	4	7	1060
30	50	1500	200	30	6	7	1300
40	40	1600	300	10	10	8	1300
50	30	1500	450	-10	15	9	1050
60	20	1200	700	-30	25	12	500
70	10	700	1400	-50	70	20	-700