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. Quantity 1 2 3 4 5 Variable Costs 40 90 150 220 300 Price Marg. Revenue 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.
Quantity 1 2 3 4 5
Variable Costs 40 90 150 220 300
Price
Marg.
Revenue
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?
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