Need help on this exercise.The monopoly has the following pricing and revenue st

Question

Need help on this exercise.The monopoly has the following pricing and revenue structure

If the firm’s marginal cost per customer is $30, and the firm wants to follow the profit-maximizing rule, what would be the firm’s quantity of customers and price charged per customer?

Select One Please: (The Quantity of customers is 4000, price 30$) OR,  (The Quantity of customers is 4000, price 60$),

(The Quantity of customers is 3000, price 70$),   (The Quantity of customers is 3000, price 30$),

Calculating the Monopolist's Marginal Revenue Quantity of customers Total revenue (TR) Price of Marginal revenue per 1,000 customers (MR) (TR) service Formula: 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 $100 $90 $80 $70 $60 $50 $40 $30 $%20 $10 $0 $0.00 90,000 160,000 210,000 240,000 250,000 240,000 210,000 160,000 90,000 0.00 $90,000 70,000 50,000 30,000 10,000 -10,000 -30,000 -50,000 70,000 -90,000

Explanation / Answer

A profit maximising monopolist will produce that quantity where MR=MC.From the chart given it can be seen that when Q=4000 and price =$60, MR is 30000(per thousand customer).And it is given that MC per customer is 30$.Therefore MC per 1000 customer is 30000.Hence it satisfies the profit maximising condition.Therfore Q=4000 and price =$60

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