ECON 2102 Summer 2018 Dr. Sewel P, MR, MC naame MC Monopoly Homework This assign
ID: 1155922 • Letter: E
Question
ECON 2102 Summer 2018 Dr. Sewel P, MR, MC naame MC Monopoly Homework This assignment is due on Monday. June 18tlh. Toe Entrepreneur can sell 10 units of output at a price of S90, but must reduce price to $85 in order to sell 11 20 units. Joe Entrepreneur does not price discriminate. Answer questions 1-4 based on this information. 1. Joc is/ is not a price taker 2. Total revenue for 10 units of output is 3. Marginal revenue for the Ith unit of output is 4. Average revenue for 11 units of output is dollars. dollars 90 dollars. 70 MR The diagram above illustrates the demand, marginal revenue and cost curves for a pure monopoly that does not practice price discrimination. Answer question 5-10 with reference to this diagram. Assume that the firm operates. 5. The profit-maximizing output for this monopoly is 6. The profit-maximizing price for this monopoly is dollars. 7. At the prolit-maximizing output, demand is relatively glastic /inelastic 8. Total revenue is maximized at an output of 9. The socially optimal or allocatively efficient output is_L 10. In the diagram above, shade the area of the deadweight loss resulting from this monopolyExplanation / Answer
1. Joe is not a price taker or else he couldn't have reduce price on his own.
2. Total revenue for 10 units of output = Price * quantity = $ (90*10) = $900
3. Total revenue for 11 units of output = $(85 * 11) = $935
Therefore, marginal revenue for 11th unit of output = TR for 11 units of output - TR for 10 units of output = $(935 - 900) = $35
4. Average revenue = total revenue / quantity
Therefore AR for 11 units of output = $(935 / 11) = $ 85
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