Question

Exhibit 21-19

	Quantity Sold			Total Revenue
Price	(units)	Total Cost	Marginal Costs		Marginal Revenue
$10	10	$80	--	100	--
9	20	100	2	180	80
8	30	130	3	240	60
7	40	170	4	280	40
6	50	230	6	300	20
5	60	300	7	300	0
4	70	380	8	280	-20

1. Refer to Exhibit 21-19. Fill in the missing values. Assume this is a single-price monopolist who is seeking to maximize profits. How many units will it sell? At what price? How much profit is made at the profit maximizing level of output?

Answer 1

A. fill table

P	Q	TC	MC	TR	MR
10	10	80		100
9	20	100	2	180	8
8	30	130	3	240	6
7	40	170	4	280	4
6	50	230	6	300	2
5	60	300	7	300	0
4	70	380	8	280	-2

TR=Price*Q

MR=chnage in TR/change in Q

MC=chnage in TC/change in Q

How many units will it sell? At what price?

Quanity: 40

price: 7.

Explanation:

Firm maximizes its profit where MR=MC. here at quantity 40 a,d price7, MR=MC. so firm will produce 40 units and charge 7 price.

How much profit is made at the profit maximizing level of output?

profit=TR-TC

=280-170

=110.