Question

A​ monopolist's maximized rate of economic profits is ​$1500 per week. Its weekly output is 500 ​units, and at this output​ rate, the​ firm's marginal cost is ​$32 per unit. The price at which it sells each unit is ​$42 per unit. At these profit and output rates, what are the firm's average total cost and marginal revenue?

Answer 1

Average total cost = $39

Marginal revenue = $32 per unit

Step-by-step explanation:

The computation of average total cost and marginal revenue is shown below:-

Average total cost = Selling price - (Economic profit ÷ Weekly output)

= $42 - ($1,500 ÷ 500)

= $42 - 3

= $39

Marginal revenue = Marginal cost

So,

Marginal revenue = $32 per unit

Therefore for computing the average total cost and marginal revenue we simply applied the above formula.