Question

The following table shows the demand curve facing a monopolist who produces at a constant marginal cost of $10.
Price Quantity
27 .......... 0
24 .......... 2
21 .......... 4
18 .......... 6
15 .......... 8
12 .......... 10
9 ........... 12
6 ........... 14
3 ........... 16
0 ........... 18
a. Calculate the firm’s marginal revenue curve.
b. What are the firm’s profit-maximizing output and price? What is its profit?
c. What would the equilibrium price and quantity be in a competitive industry?
d. What would the social gain be if this monopolist were forced to produce and price at the competitive equilibrium? Who would gain and lose as a result?



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  • CreatedSeptember 19, 2013
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