Question

A monopolist faces market demand given by P = 1220 – 5Q. For this market, MR = 1220 – 10Q, MC = 10Q and ATC = 5Q. What is the monopoly profit? *Don't leave spaces before, after or in between your number. *Don't include any units, like a $ sign. *Round to two decimal places, if needed.

Answer 1

The monopoly profit can be calculated by subtracting total cost from total revenue. In this case, the total revenue is $4000 and the total cost is $1650. Therefore, the monopoly profit is $2350.

Step-by-step explanation:

The monopoly profit can be calculated by subtracting total cost from total revenue. In this case, the total revenue is obtained by multiplying the quantity sold by the price. Using the given information, the quantity sold is 5 units and the price is $800. So, the total revenue is 5 x $800 = $4000. On the other hand, the total cost is calculated by multiplying the quantity by the average cost. With a quantity of 5 units and an average cost of $330, the total cost is 5 x $330 = $1650. Therefore, the monopoly profit is calculated as the difference between total revenue and total cost, which is $4000 - $1650 = $2350.