7. The following table shows the demand for water and cost conditions for the New South Springdale Water Utility monopoly. a. Complete the table. Quanity (gallons) Marginal Revenue Price Total Marginal Average Total Costs (per gallon) Revenue Costs 100 101 102 $1.28 $1.27 $1.26 $0.15 $0.18 $0.21 $1.252 $1.241 $1.231 103 104 $1.25 $1.24 $0.23 $0.26 $1.221 $1.212
7. The following table shows the demand for water and cost conditions for the New South Springdale Water Utility monopoly. a. Complete the table. Quanity (gallons) Marginal Revenue Price Total Marginal Average Total Costs (per gallon) Revenue Costs 100 101 102 $1.28 $1.27 $1.26 $0.15 $0.18 $0.21 $1.252 $1.241 $1.231 103 104 $1.25 $1.24 $0.23 $0.26 $1.221 $1.212
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
1

Transcribed Image Text:7. The following table shows the demand for water and cost conditions for the New South Springdale Water Utility, a pure
monopoly.
a. Complete the table.
Quanity
(gallons)
Marginal
Revenue
Price
Total
Marginal
Costs
Average
Total Costs
(per gallon)
Revenue
Profit
100
101
102
$1.28
$1.27
$1.26
$1.25
$1.24
$0.15
$0.18
$0.21
$0.23
$0.26
$1.252
$1.241
$1.231
$1.221
$1.212
103
104
b. What is true about the relationship between marginal revenue and marginal costs when profit is the greatest?
c. Suppose the government imposed a tax on the firm of $103, which the firm had to pay even if it went out of busi-
ness. What would be the profit-maximizing level of output? What would happen to profits? Would the firm stay in
business?
Can you answer Part C please?
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