Eco Tutorial 6 Q1.docx

In the following table is demand and cost data for a pure monopolist. Complete the table by filling in the columns for total revenue, marginal revenue, and marginal cost. Answer three questions: (a) What output will the monopolist produce? (b) What price will the monopolist charge? (c) What total profit will the monopolist receive at the profit-maximising level of output?

Quantity

Price ($)

Total revenue($)

Marginal revenue ($)

Total cost($)

Marginal cost ($)

0 1 2 3 4 5 6 7 8 9 10

34 32 30 28 26 24 22 20 18 16 14

0 32 60 84 104 120 132 140 144 144 140

+32 +28 +24 +20 +16 +12 +8 +4 +0 -4

20 36 46 50 54 56 64 80 100 128 160

16 10 4 4 2 8 16 20 28 32

a) The monopolist will produce 6 units of output due to the MR=MC RULE, the 12$ is the closest equality to 8$ compared to others. b) The monopolist will charge 22$. c)The total profit that the monopolist will be received at the profit-maximising level of output is 68$.( 132$-64$=68$)