Good X. Assume there are no external Ed Scahill has acquired a monopoly in the p

Question

Good X. Assume there are no external Ed Scahill has acquired a monopoly in the production of costs or benefits of producing and consuming Good X imposed on the economy: The table below summarizes his current cost and revenue structure: Market Price Quantity Total Revenue Marginal Total Cost per Marginal Sold Per per Week (S)Revenue Week (S) Cost Week 19 18 17 16 15 19 36 51 64 75 84 17 26 37 50 65 82 14 Does Ed face any Fixed Costs in operating his business? How do you know? Fill in the blanks present in the MR and MC columns If Ed maximizes profits: A. Hc will produce & sell . B. His Total Revenue will be C. His Total Costs will be D. His Average Total Cost will be E He will earn a Total Profit of units of Good X per week and charge a price of F. His level of Profit earned per unit produced& sold will be If the Ed loses his monopoly, and the market for Good X becomes perfectly competitive, then The new short-run equilibrium market price will be equal to H. The new level of industry output (sales per week) will equal I The amount of Economic Surplus generated in the Market for Good X will (circle one) 3.Fall 1. Stay the same 2. Rise 4. Need More Info to Determine.

Explanation / Answer

Ed faces a fixed cost of $10. This can be justified as the marginal cost at the first level of output is $7. When no output is produced (i.e., Q = 0) then firms incur only fixed costs of production. This implies that the fixed cost that Ed faced was 17 - 7 = $10.

For profit maximization, Ed will produce at a level where MR = MC.

A. He will produce & sell 4 units of output and charge a price worth $16. This is the level of output where the marginal costs equal the marginal revenue.
B. His total revenue will be $64.
C. His total costs will be $50.
D. His average total cost will be $12.50

E. He will earn a Total Profit of (TR - TC) = 64 - 50 = $14

F. His level of profit earned per unit produced and sold will be (14/4) = $3.50

(You can ask a limited number of questions at a time. Kindly post the remaining part as a separate question. I have answered the first full part. Hope it helps.)

Market Price Quantity TR =
P x Q MR =
TRn-TRn-1 Total Cost MCn =
TCn-TCn-1 ATC = TC/Q 19 1 19 19 17 7 17 18 2 36 17 26 9 13 17 3 51 15 37 11 12.33 16 4 64 13 50 13 12.50 15 5 75 11 65 15 13 14 6 84 9 82 17 13.66

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