11. A monopolist is faced with the following cost and revenue curves: (a) What is the maximum-profit output? 80 MC (b) What is the maximum -profit price? 70 (e) What is the total revemue at this price and output? 60 50 (d) What is the total cost at this price and output? AÇ 40 30 (e) What is the level of profit at this priece and output? 20 AR (Đ If the monopolist were ordered to produce 300 units, what would be the market price? 10 100 200 300 40 500 (2) How much profit would now be made? -10 MR (h) If the monopolist were faced with the same demand, but average costs were -20 Quantity

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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11. A monopolist is faced with the following cost and revenue curves:
(a) What is the maximum-profit output?
80
MC
(b) What is the maximum-profit price?
70
(c)
What is the total revenue at this price
and output?
60
50
AÇ
(d) What is the total cost at this price and
output?
40
30
(e) What is the level of profit at this price
and output?
20
AR
() If the monopolist were ordered to
produce 300 units, what would be the
market price?
10
100
200
300
403
500
600
(2) How much profit would now be made?
-10
MR
(h) If the monopolist were faced with the
same demand, but average costs were
constant at £60 per unit, what output
would maximise profit?
-20
Quantity
What would be the price now?.
How much profit would now be made?.
(k) Assume now that the monopolist decides not to maximise profits, but instead sets a price of
£40. How much will now be sold?
O What is the marginal revenue at this output?
(m) What does the answer to (1) indicate about total revenue at a price of £40?
(n) What is the price elasticity of demand at a price of £40? (You do not need to do a calculation
to work this out: think about the relationship between MR and TR.)
Transcribed Image Text:11. A monopolist is faced with the following cost and revenue curves: (a) What is the maximum-profit output? 80 MC (b) What is the maximum-profit price? 70 (c) What is the total revenue at this price and output? 60 50 AÇ (d) What is the total cost at this price and output? 40 30 (e) What is the level of profit at this price and output? 20 AR () If the monopolist were ordered to produce 300 units, what would be the market price? 10 100 200 300 403 500 600 (2) How much profit would now be made? -10 MR (h) If the monopolist were faced with the same demand, but average costs were constant at £60 per unit, what output would maximise profit? -20 Quantity What would be the price now?. How much profit would now be made?. (k) Assume now that the monopolist decides not to maximise profits, but instead sets a price of £40. How much will now be sold? O What is the marginal revenue at this output? (m) What does the answer to (1) indicate about total revenue at a price of £40? (n) What is the price elasticity of demand at a price of £40? (You do not need to do a calculation to work this out: think about the relationship between MR and TR.)
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