Economics: Private and Public Choice
Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Chapter 24, Problem 15CQ
To determine

Long run cost conditions in an industry.

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Use the graph to answer the following 5 questions. A single priced unregulated monopolist faces the demand curve and has the cost curves illustrated in the diagram below. 1. What is the profit Price maximizing quantity of output? 70 a) 25 units. b) 40 units. c) 50 units. d) 60 units. 60 e) 70 units. f) 80 units g) 90 units Marginal Cost 50 2. What price does this monopolist charge? a) $58 b) $20 40 Average Total Cost c) $35 d) $30 e) $45. f) $50 30 g) $40 h) $38 3. What are the total profits? a) $1200 b) $0 c) $1250 d) $200 e) $250. f) $2250. g) $150 h) $1600 20 10 Demand 20 40 60 80 100 120 140 160 Quantity
A monopolist has a demand curve given by Q=100-P and a total cost curve given by TC= Q2 + 16. a.Find the monopolist’s profit maximizing quantity and price. Indicate them on the graph. b.How much economic profit will the monopolist earn? c. Calculate the price elasticity of demand at the equilibrium price level.
I will rate and like, thank you! Easy economics question. Create graph that includes: Demand curve, marginal cost, and marginal revenue. Identify the profit-maximizing quantity and price for this monopolist. To do this you will need to determine marginal revenue at each level of output. Choose output that satisfies the monopolist’s profit maximizing condition of MR = MC.  Does this firm earn a profit? How much profit if they do?
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