2. A monopolist faces the following demand curve: PriceQuantityDemanded $105 $910 $816 $723 $631 $54

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2.

A monopolist faces the following demand curve:

PriceQuantityDemanded

$105

$910

$816

$723

$631

$549

$452

$360

The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist’s averagetotal cost is

A) $6.74
B) $9.00
C) $7.50
D) $5.8210.

Quantity

Price

Total Revenue

Average Revenue

Marginal Revenue

1

$35

$35

2

64

32

29

3

$29

4

17

5

$23

11

6

120

7

$17

-1

8

-7

9

99

11

-13

10

80

8

If the monopolist sells 8 units of itsproduct, how much total revenue will it receive from the sale?

You wil have to complete the entries in this table to get an answer.It is a wothwhile exercise and I encourage you to completethe table.

HINT: (a.) Total Revenue = Price x Quantity. (So for quantity of 3 x price of $29 = 87 total revenue)

(b) Average Revenue is the same as Price. (So column 2 and column 4 would be the same. Calculate to see if that is correct)

(c) Marginal Revenue = Change in TR divided by change in quantity.(You calculated TR = 87 for Q=3. Thus to find MR for Q = 3,find thechange in TR= 87 – 64 and divided by one).

A) 112
B) It cannot be determined from the information provided.
C) 164
D) 40

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