Question

# Assume an Unregulated Monopolist with the following demand and cost data. Q P TR MR Q...

Assume an Unregulated Monopolist with the following demand and cost data.

 Q P TR MR Q TC MC Profit / loss 0 130 0 50 1 120 1 90 2 110 2 120 3 100 3 140 4 90 4 170 5 80 5 210 6 70 6 260 7 60 7 320 8 50 8 390 9 40 9 470

#1) How much should the firm produce in order to maximize profits?

#2) What price will the firm charge?

#3) How much profit or loss does the firm make?

#4) How much would have been produced under Perfect Competition, and at what price?

Hint: Use the MR ≥ MC Rule!

 Q P TR= P*Q MR Q TC MC Profit / loss = TR - TC 0 130 0 0 50 -50 1 120 120 120 1 90 40 30 2 110 220 100 2 120 30 100 3 100 300 80 3 140 20 160 4 90 360 60 4 170 30 190 5 80 400 40 5 210 40 190 6 70 420 20 6 260 50 160 7 60 420 0 7 320 60 100 8 50 400 -20 8 390 70 10 9 40 360 -40 9 470 80 -110

1) The firm should produce 5 units to maximize profit. At this output level profit is \$190.

2) The firm will charge \$80

3) The firm will make a profit of \$190.

4) Under Perfect Competition, the firm have been produced 5 units and charge \$80.

#### Earn Coins

Coins can be redeemed for fabulous gifts.