VC FC TC AVC AFC ATC MC 0.00 3,780.00 NA NA NA NA 1 400.00 2 700.00 3 900.00 4 1,000.00 1,050.00 1,200.00 7 1,400.00 8. 2,000.00 2,700.00 9 10 4,000.00 2. Graph the market demand and the monopoly marginal revenue MR. Recall that the marginal revenue of the monopoly has slope that is two times greater (in absolute value) than the demand curve. a. Find the profit maximizing quantity Qm monopoly chooses to produce. b. Find the monopoly price Pm. c. Calculate monopoly economic profit.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please answer question 2 a to e
1. Consider a market with demand D: P = 2,050 – 75Q that is served by a
monopoly. The structure of the monopolistic firm's costs is given in the table
below. Calculate missing values.
a. Graph the fixed, variable and total cost curves.
b. Graph the marginal, average variable and average total cost curves.
b.
VC
FC
TC
AVC
AFC
АТС
MC
0.00
3,780.00
NA
NA
NA
NA
1
400.00
2
700.00
3
900.00
4
1,000.00
5
1,050.00
1,200.00
7
1,400.00
8
2,000.00
2,700.00
9.
10
4,000.00
2. Graph the market demand and the monopoly marginal revenue MR. Recall
that the marginal revenue of the monopoly has slope that is two times
greater (in absolute value) than the demand curve.
a. Find the profit maximizing quantity Qm monopoly chooses to produce.
b. Find the monopoly price Pm.
c. Calculate monopoly economic profit.
d. Show that the monopoly produces inefficiently.
e. Show the price Pc and quantity Qc the firm would produce if it behaved as
a competitive firm.
3. Label axes and all curves in the diagram below representing a monopoly.
a. Show the quantity Qm and price Pm the monopoly will choose to maximize
the monopoly profit.
b. Show the quantity Qc and price Pc the monopoly would choose if it behaved
as competitive firm.
Transcribed Image Text:1. Consider a market with demand D: P = 2,050 – 75Q that is served by a monopoly. The structure of the monopolistic firm's costs is given in the table below. Calculate missing values. a. Graph the fixed, variable and total cost curves. b. Graph the marginal, average variable and average total cost curves. b. VC FC TC AVC AFC АТС MC 0.00 3,780.00 NA NA NA NA 1 400.00 2 700.00 3 900.00 4 1,000.00 5 1,050.00 1,200.00 7 1,400.00 8 2,000.00 2,700.00 9. 10 4,000.00 2. Graph the market demand and the monopoly marginal revenue MR. Recall that the marginal revenue of the monopoly has slope that is two times greater (in absolute value) than the demand curve. a. Find the profit maximizing quantity Qm monopoly chooses to produce. b. Find the monopoly price Pm. c. Calculate monopoly economic profit. d. Show that the monopoly produces inefficiently. e. Show the price Pc and quantity Qc the firm would produce if it behaved as a competitive firm. 3. Label axes and all curves in the diagram below representing a monopoly. a. Show the quantity Qm and price Pm the monopoly will choose to maximize the monopoly profit. b. Show the quantity Qc and price Pc the monopoly would choose if it behaved as competitive firm.
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