Question

Suppose a pure monopolist faces the following cost data, as shown by the table on the left, and the demand schedule, as shown on the right.

Answer 1

The profit-maximizing price is $10.00 and output is 6 units. The monopolist's profit is -$225 (indicates a loss)

TR (Total Revenue) and MR (Marginal Revenue), you can multiply the quantity demanded by the price for each level of production. For example, when producing 0 units, the TR would be 0 x $115 = $0.

MR, you can find the change in TR and divide it by the change in quantity.

For example, when going from producing 1 unit to 2 units, the change in TR is $72.50 - $105.00 = -$32.50 and the change in quantity is 1 - 2 = -1. So, MR is -$32.50 / -1 = $32.50.

The profit-maximizing price for this monopolist is $10.00, which can be determined by considering where MR = MC (Marginal Revenue = Marginal Cost). The profit-maximizing output is 6 units, which is the quantity of production where MR = MC.

The monopolist's profit can be calculated by subtracting the total cost (TC) from the total revenue (TR) at the profit-maximizing output.

In this case, the TC is $47.50 x 6 = $285 and the TR is $10.00 x 6 = $60.

Therefore, the profit is TR - TC = $60 - $285 = -$225. (Note: Negative profit indicates a loss).

Answer 2

Here is the completed table with the missing TR and MR amounts:

Production and Costs Demand

Quantity Average Product

0 $115

2 $115

3 $115

4 $115

5 $115

6 $115

7 $115

8 $115

9 $115

10 $115

b. The profit-maximizing price for this monopolist is $60.00/unit.

c. The profit-maximizing output for this monopolist is 4 units.

d. The monopolist's profit is $72.50.

The Complete Question

Suppose a pure monopolist faces the following cost data, as shown by the table on the left, and the demand schedule, as shown on the right a. Calculate the missing TR and MR amounts, Instructions: Enter your answers rounded to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Production and Costs Demand Total Average Average Average Product Variable Marginal Fixed Cost Quantity Price Total Cost Marginal Cost Cost Total Revenue Demanded Revenue 0 $115 0 1 $60.00 $45.00 $105.00 $45 100 1 2 30.00 42.50 72.50 40 83 2 3 20.00 40.00 60.00 35 71 3 4 15.00 37.50 52.50 30 63 4 5 12.00 37.00 49.00 35 55 5 6 10.00 37.50 47.50 40 48 6 7 8.57 38.57 47.14 45 42 7 8 40.63 48.13 55 37 В 9 6.67 43.33 50.00 65 33 9 10 6.00 46.50 52.50 75 29 10 7.50 Instructions: Enter your answers as a whole number. b. What is the profit-maximizing price for this monopolist? ta What is the profit-maximizing output? units c. What is the monopolist's profit?