Question

Suppose a monopolist’s profit-maximizing output is 400 units per week and that the firm sells its output at a price of $100 per unit. The firm has total costs of $8,000 per week. Assume the monopolist is maximizing its profit and earns $50 per unit from the sale of the last unit produced each week

Answer 1

To find the monopolist's profit, we need to first calculate the total revenue, total cost, and total profit:

Total revenue = price x quantity = $100 x 400 = $40,000

Total cost = fixed cost + variable cost = $8,000 + (400 - 1) x $50 = $22,950

Note that the variable cost per unit is not given, but we can assume that it is constant and equal to $50 per unit, and that the last unit sold also has a variable cost of $50.

Total profit = total revenue - total cost = $40,000 - $22,950 = $17,050

Therefore, the monopolist's profit is $17,050 per week.

Step-by-step explanation: