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Quantity demanded (dollars per(repairs per Price Total cosit (dollars) repair)

Price Quantity demanded tal cost
(dollars per repair) (repairs per week) (dollars)
100 0 400
90 10 800
80 20 1400
70 30 2200
60 40 3200

Dee's TV Repair is the only TV repair shop in a small town. Dee is a single-price monopolist. Based on the demand and cost information in the table above, what quantity of TV repairs should Dee undertake?
A) 30 per week
B) 20 per week
C) 10 per week
D) 0 per week

User Fruchtose
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1 Answer

5 votes

Final answer:

The optimal quantity of TV repairs Dee should undertake to maximize profits cannot be determined with the information provided. Marginal revenue and marginal costs are essential for this decision and are not specified in the dataset. Without these figures, we cannot accurately answer the question regarding Dee's optimal output level.

Step-by-step explanation:

To determine the optimal quantity of TV repairs Dee should undertake, we need to look at the concept of marginal revenue and marginal cost. The goal is to maximize profits, which occurs when marginal revenue equals marginal cost (MR=MC). By calculating the change in total revenue and the change in total cost for each additional repair, we can find the point at which Dee should stop providing additional repairs to maximize profits.

Unfortunately, the provided data does not include marginal revenue or marginal costs, which are crucial for making this decision. Generally, if the marginal cost is lower than the marginal revenue for the next unit, it would make sense to continue to increase production. Conversely, if the marginal revenue is lower than the marginal cost for the next unit, it would not be profitable to produce that unit.

Given the lack of necessary information to calculate marginal revenue and marginal costs directly from the question, the answer cannot be determined from the provided dataset alone. The concept of marginal analysis is key to finding the optimal output level for Dee's TV Repair and any business in a monopolistic or oligopolistic market. For more comprehensive decision-making, these calculations are essential alongside understanding Dee's position as a single-price monopolist in the market.

User Admenva
by
8.6k points