A monopolist serves a market with five potential buyers, each of whom would buy at most one piece of the monopolist’s good. Anna would be willing to pay up to £80 for it, Bob up to £90, Chloe up to £100, Dave up to £110 and Elizabeth up to £120. The monopolist’s variable cost function is given in below table. a) Indicate in the table which price the monopolist would want to charge for each given quantity. b) Find the marginal revenue for each quantity. c) Find the monopolist’s profit maximising price under the assumption that he wants to produce anything at all. d) How large can the monopolist’s fixed costs be such that he still wants to start producing at all?
A monopolist serves a market with five potential buyers, each of whom would buy at most one piece of the monopolist’s good. Anna would be willing to pay up to £80 for it, Bob up to £90, Chloe up to £100, Dave up to £110 and Elizabeth up to £120. The monopolist’s variable cost function is given in below table. a) Indicate in the table which price the monopolist would want to charge for each given quantity. b) Find the marginal revenue for each quantity. c) Find the monopolist’s profit maximising price under the assumption that he wants to produce anything at all. d) How large can the monopolist’s fixed costs be such that he still wants to start producing at all?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A monopolist serves a market with five potential buyers, each of
whom would buy at most one piece of the monopolist’s good. Anna would be willing to pay up to
£80 for it, Bob up to £90, Chloe up to £100, Dave up to £110 and Elizabeth up to £120. The
monopolist’s variable cost function is given in below table.
a) Indicate in the table which
quantity.
b) Find the marginal revenue for each quantity.
c) Find the monopolist’s profit maximising price under the assumption that he wants to
produce anything at all.
d) How large can the monopolist’s fixed costs be such that he still wants to start producing at
all?
Transcribed Image Text:Quantity
Variable Costs
1
2
4
40
90
150
220
300
Price
Marg.
Revenue
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