Question

Please refer to the following incomplete data describing costs and revenues for a monopolistic firm. Assuming that this firm wants to maximize profits, how much profit will this firm earn? Output Price Total Revenue Marginal Revenue Total Cost Marginal Cost Average Total Cost 0 $100 $0 na $50 na na 1 $90 $90 $90 $65 $15 ? 2 $80 $160 ? $75 ? $38 3 $70 $210 ? $95 $20 $32 4 $60 $240 $30 $125 ? $31 5 $50 $250 $10 $175 ? ? 6 $40 $240 -$10 $265 $90 $44 7 $30 $210 ? $415 $150 $59 None, this firm should shut down. Less than $50 $70 $115

Answer 1

Table 1

Q	P	TR	MR	TC	MC	ATC
0	100	0	na	50	na	na
1	90	90	90	65	15	65
2	80	160	70	75	10	38
3	70	210	50	95	20	32
4	60	240	30	125	30	31
5	50	250	10	175	50	35
6	40	240	-10	265	90	44
7	30	210	-30	415	150	59

The calculations

The monopoly equilibrium occurs at MR=MC. From table MR=MC=30. At this level Q=4. TR=240 and TC=125. Therefore, the profit of the monopolist is

Therefore, the correct option is: 115