Based on the above graph, answer the following questions for a monopoly and a pe

Question

Based on the above graph, answer the following questions for a monopoly and a perfectly competitive firm.
A. For the monopolist:
i. Profit maximizing output =
ii. ATC =
iii. AR =
iv. Price =
v. Total Revenue =
vi. Total Cost =
vii. Profit =
B.For the perfectly competitive firm:
i. Profit maximizing output =
ii. ATC =
iii. AR =
iv. Price =
v. Total Revenue =
vi. Total Cost =
vii. Profit =
C. Discuss the differences you observe in your answers above between the monopoly
and perfectly competitive firm.

Explanation / Answer

A. For the monopolist: i. Profit maximizing output =20 ii. ATC =20*18/20=18 iii. AR =TR/Q=30*20/20=30 iv. Price =30 v. Total Revenue =30*20=600 vi. Total Cost =18*20=360 vii. Profit =TR-TC=600-360=240 B.For the perfectly competitive firm: i. Profit maximizing output =35 ii. ATC =35*21/35=21 iii. AR =TR/Q=21*35/35=21 iv. Price =21 v. Total Revenue =21*35=735 vi. Total Cost =18*40=720 vii. Profit =TR-TC=735-720=15 C. Discuss the differences you observe in your answers above between the monopoly and perfectly competitive firm. The differences are that the monopoly offers a lower quantity at a higher price and makes more economic profit. This however, causes a dead weight loss to society

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.