Consider the following information about bikes, where Q is output, TC is the tot
ID: 1254697 • Letter: C
Question
Consider the following information about bikes, where Q is output, TC is the total cost of production, and p is the price.Q TC MC P TR MR Profits
0 2000 - 600
1 2500 575
2 2800 550
3 3000 525
4 3160 500
5 3340 475
6 3540 450
7 3780 425
8 4080 400
9 4410 375
10 4770 350
11 5190 325
12 5760 300
a) (6 pts) Fill in the remaining columns in the chart.
b) (2 pts) Where is the marginal revenue curve relative to the firm's demand curve?
c) (4 pts) Determine the profit maximizing price and quantity. At this price and quantity, calculate this monopoly's economic profits.
d) (2 pts) Given this firm's level of economic profits, where must the firm's average total cost curve (ATC) and average variable cost curve (AVC) lie?
e) (2 pts) List the causes of monopoly.
f) What characteristics do monopolies and perfectly competitive firms have in common?
Explanation / Answer
Q
TC
MC
P
TR
MR
PROFIT
0
2000
600
0
-2000
1
2500
500
575
575
575
2
2800
300
550
1100
525
3
3000
200
525
1575
475
4
3160
160
500
2000
425
5
3340
180
475
2375
375
-965
6
3540
200
450
2700
325
-840
7
3780
240
425
2975
275
-805
8
4080
300
400
3200
225
-880
9
4410
330
375
3375
175
-1035
10
4770
360
350
3500
125
11
5190
420
325
3575
75
12
5760
570
300
3600
25
C)----- REVENUE CURVE IS BELOW THE FIRM DEMAND CURVE
D)COST OF PRODUCTION IS 2000 DOLLARS
E) LOSS = -2000 DOLLARS
G)MC=MR
Q
TC
MC
P
TR
MR
PROFIT
0
2000
600
0
-2000
1
2500
500
575
575
575
2
2800
300
550
1100
525
3
3000
200
525
1575
475
4
3160
160
500
2000
425
5
3340
180
475
2375
375
-965
6
3540
200
450
2700
325
-840
7
3780
240
425
2975
275
-805
8
4080
300
400
3200
225
-880
9
4410
330
375
3375
175
-1035
10
4770
360
350
3500
125
11
5190
420
325
3575
75
12
5760
570
300
3600
25
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