Question

Please refer to the following incomplete data describing costs and revenues for a monopolistically competitive firm. Assuming that this firm wants to maximize profits, what price shouldit charge? Output Price Marginal Revenue Total Cost Average Total Cost 0 $20 na $20 na 10 $19 $19 $90 $9.00 20 $18 $17 $150 $7.50 30 $17 $15 $240 $8.00 40 $16 $13 $370 $9.25 50 $15 $11 $590 $11.80 $16 $18 $20 None of the above.

Answer 1

Output	Price	Marginal Revenue	Total Cost	Average Total Cost	Total Revenue	Profit
0	20	NA	20	NA	0	-20
10	19	19	90	9	190	100
20	18	17	150	7.5	360	210
30	17	15	240	8	510	270
40	16	13	370	9.25	640	270
50	15	11	590	11.80	750	160

After putting the data in the table format, we get this table. I just added total revenue column by multiplying output and price.

We know that profit is the difference of the total revenue and total cost. As seen above, it should charge $16, to maximize profit.