The table below shows the demand schedule of a monopolist. Calculate marginal revenue and fill in the revenue column in the table. Assume that output can only be sold in integer amounts 1 unit, 2 units, etc. Once you've filled in marginal revenue, identify the quantity produced by the monopolist in this market.
|Quantity||Price||Marginal Cost||Marginal Revenue|
How units does Number many the monopolist produce? _____Units
Monopolist Profit Maximization:
Profit maximization is a microeconomics concept that firm uses to fix price, output and inputs that give the greatest profit. Monopoly is the sole producer or seller in the whole market and therefore, he/she maximizes profit by producing where marginal revenue equals marginal cost and price is exactly above the profit maximizing output on the demand curve.
Answer and Explanation:
The monopolist will produce 3 units of output and sell at $11 each. This is because marginal revenue is approximately equal to marginal cost at 3 units. Total revenue is price times quantity. Marginal revenue is extra revenue gained as a result of selling additional unit of output.
|Quantity||Price ($)||Marginal cost||Total revenue||Marginal revenue|
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from Intro to Business: Help and ReviewChapter 3 / Lesson 13