a.What is the maximum-profit price and output,total revenue, total cost and profit? b.If the monopolist were ordered to produce 300 units, what would be the market price and how much profit would now be made c.If the monopolist were faced with the same demand, but average costs were constant at £60 per unit, what output would maximise profit? What would be the price now?................................
- A monopolist is faced with the following cost and revenue
curves: (picture)
a.What is the maximum-profit price and output,total revenue, total cost and profit?
b.If the monopolist were ordered to produce 300 units, what would be the market price and how much profit would now be made
c.If the monopolist were faced with the same demand, but average costs were constant at £60 per unit, what output would maximise profit?
What would be the price now?.................................................................................................
(j) How much profit would now be made? ...................................................................................
(k) Assume now that the monopolist decides not to maximise profits, but instead sets a price of
£40. How much will now be sold?
..................................................................................................................................................
(l) What is the marginal revenue at this output? ..........................................................................
- What does the answer to (l) indicate about total revenue at a price of £40? ...........................
- What is the
price elasticity of demand at a price of £40? (You do not need to do a calculation to work this out: think about the relationship between MR and TR.)
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