The market demand at the beginning is D1, and its corresponding marginal revenue
ID: 1189403 • Letter: T
Question
The market demand at the beginning is D1, and its corresponding marginal revenue is MR1. The initial ATC is ATC1, and the original supply is MC1.
Therefore, the monopolist sells _____ units at $ _____ per unit, and his/her total profit is approximately $____________.
After a given time period, due to investment and technological advances, which cost the monopolist an increase in TFC, results in a cost of production decrease to ATC2 and its corresponding supply to MC2. The monopolist, then, in the absence of price regulation by the government, would like to produce _______ units and charge a unit price of $__________.
However, due to quality improvements and effective advertising, the demand increases to D2, while its corresponding marginal revenue is MR2, with ATC2 and MC2 remaining unchanged. The monopolist, therefore, produces and sells approximately ______ units at $_______ per unit. His/her total profit is now approximately $___________.
Using the graph below, ansowe the following questions: Using the graph below, answer the following questions 60 50 45 40 MC1 CCI 35 30 MC2 25 20 TC1 15 ATC2 10 DI IID2 10 5 20 25 3 35 40 45 50 55 60 Quantity MR1 MR2Explanation / Answer
The market demand at the beginning is D1, and its corresponding marginal revenue is MR1. The initial ATC is ATC1, and the original supply is MC1.
Therefore, the monopolist sells 8 units at $20 per unit, and his/her total profit is approximately (20-12.5).(8) = $60.
After a given time period, due to investment and technological advances, which cost the monopolist an increase in TFC, results in a cost of production decrease to ATC2 and its corresponding supply to MC2. The monopolist, then, in the absence of price regulation by the government, would like to produce 12.5 units and charge a unit price of $25.
However, due to quality improvements and effective advertising, the demand increases to D2, while its corresponding marginal revenue is MR2, with ATC2 and MC2 remaining unchanged. The monopolist, therefore, produces and sells approximately 25 units at $25 per unit.
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