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

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 