a) Revenue and profit at each output rate by referring to the below data. b) What is the profit maximizing rate of output? c) Calculate the dry cleaner’s marginal revenue and marginal cost at each output level. What is the profit maximizing output level? Output (Suits cleaned) Price per Suit ($) Total Costs ($) 0 8.00 3.00 1 7.50 6.00 2 7.00 8.50 3 6.50 10.50 4 6.00 11.50 5 5.50 13.50 6 5.00 16.00 7 4.50 19.00 8 4.00 24.00 Concept introduction: Revenue: Total amount received through product sales. Profit: Profit is the difference between total revenue earned by selling the product and total cost incurred by producing them. Marginal revenue: Marginal revenue is the extra revenue earned by selling an extra product unit. Marginal cost: Marginal cost is the extra cost incurred by producing one extra unit of the commodity. Topic name and a short description about it: Profit maximization under monopoly market structure Answer: Revenue = Price * output Profit = Revenue -Total cost Profit is maximized at the level of 5 t h and 6 t h unit of the output For a monopoly, the profit is maximized at the level of output where marginal revenue is equal to marginal cost. Therefore, from the table in answer (c) we can see it at the 6 t h unit of the output.

Question

Want to see the full answer?

Answer 1

Question

Chapter 24, Problem 1P

To determine

a) Revenue and profit at each output rate by referring to the below data.

b) What is the profit maximizing rate of output?

c) Calculate the dry cleaner’s marginal revenue and marginal cost at each output level. What is the profit maximizing output level?

Output (Suits cleaned) Price per Suit ($) Total Costs ($)

0 8.00 3.00

1 7.50 6.00

2 7.00 8.50

3 6.50 10.50

4 6.00 11.50

5 5.50 13.50

6 5.00 16.00

7 4.50 19.00

8 4.00 24.00

Concept introduction:

Revenue: Total amount received through product sales.

Profit: Profit is the difference between total revenue earned by selling the product and total cost incurred by producing them.

Marginal revenue:

Marginal revenue is the extra revenue earned by selling an extra product unit.

Marginal cost:

Marginal cost is the extra cost incurred by producing one extra unit of the commodity.

Topic name and a short description about it: Profit maximization under monopoly market structure

Answer:

Revenue = Price * output
Profit = Revenue -Total cost
Profit is maximized at the level of 5^t^h and 6^t^h unit of the output

For a monopoly, the profit is maximized at the level of output where marginal revenue is equal to marginal cost. Therefore, from the table in answer (c) we can see it at the 6^t^h unit of the output.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

In 1932 babe Ruth made $75,000. How much is that in todays dollars please give the right answer step by step

Evaluate machine XYZ when MARR is 12% per year. Pertinent data are as follows: Machine XYZ Investment cost Expected life Market (salvage) value Annual revenue Annual expenses $10,000 5 years $1,000 $8,000 $4,000 How much is the excess of the cash flow using the Annual Worth Method? Blank 1 Calculate the External Rate of Return. Blank 2 Compute the payback period of the investment. Blank 3 Would you recommend this investment? Explain briefly. Blank 4

Please make sure to answer each step and show work. Thank you!