Question 1Suppose there is only one supplier in the market of product X. The following table showspartial information of product X and the supplier's costPriceQuantity0Marginal Cost$1,7001,5001,4001,3001,2001,1001,000138023904104305460500790055080061070077060010790A. Determine the supplier's profit-maximizing output quantity. Explain your answer.B. At what price should the supplier charge to maximize its profit? Explain youranswer.C. Suppose at the profit-maximizing output quantity you have determined in part A,the average variable cost is $428.33 and the average total cost is $628.33Calculate the total profit at the profit-maximizing output quantity

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Asked Nov 26, 2019
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Question 1

Suppose there is only one supplier in the market of product X. The following table shows partial information of product X and the supplier’s cost.

 

A. Determine the supplier’s profit-maximizing output quantity. Explain your answer. 

B. At what price should the supplier charge to maximize its profit? Explain your answer. 

C. Suppose at the profit-maximizing output quantity you have determined in part A, the average variable cost is $428.33 and the average total cost is $628.33. Calculate the total profit at the profit-maximizing output quantity.

Question 1
Suppose there is only one supplier in the market of product X. The following table shows
partial information of product X and the supplier's cost
Price
Quantity
0
Marginal Cost
$1,700
1,500
1,400
1,300
1,200
1,100
1,000
1
380
2
390
410
430
5
460
500
7
900
550
800
610
700
770
600
10
790
A. Determine the supplier's profit-maximizing output quantity. Explain your answer.
B. At what price should the supplier charge to maximize its profit? Explain your
answer.
C. Suppose at the profit-maximizing output quantity you have determined in part A,
the average variable cost is $428.33 and the average total cost is $628.33
Calculate the total profit at the profit-maximizing output quantity
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Question 1 Suppose there is only one supplier in the market of product X. The following table shows partial information of product X and the supplier's cost Price Quantity 0 Marginal Cost $1,700 1,500 1,400 1,300 1,200 1,100 1,000 1 380 2 390 410 430 5 460 500 7 900 550 800 610 700 770 600 10 790 A. Determine the supplier's profit-maximizing output quantity. Explain your answer. B. At what price should the supplier charge to maximize its profit? Explain your answer. C. Suppose at the profit-maximizing output quantity you have determined in part A, the average variable cost is $428.33 and the average total cost is $628.33 Calculate the total profit at the profit-maximizing output quantity

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Expert Answer

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Step 1

A.

The profit maximizing output in the market of monopoly will be determined at the intersection of the marginal cost and the marginal revenue curves of the firm. In this case, the quantity and per unit price as well as marginal cost are given. The total revenue of the firm can be calculated by multiplying the price with the respective quantity. This can be calculated as follows:

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Total Revenue = Output x Unit price 1x1,500 1,500

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Step 2

The marginal revenue can be calculated by dividing the change in total revenue with the change in the quantity as follows:

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Achange in TR AChange in quantity (1,500-0) (1-0) Marginal revenue 1,500 1 1,500

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Step 3

Thus, the total revenue and marginal revenue at all the levels ca...

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Marginal Cost (МC) Price (P) Marginal revenue Quantity (Q) Total Revenue (TR = PxQ) ΔTR (MR ΔQ 1,700 1,500 1,400 0 0 1,500 1 380 1,500 2,800 3,900 4,800 5,500 6,000 6,300 6,400 6,300 390 2 1,300 1,100 410 1,300 1,200 1,100 1,000 3 4 430 460 900 700 5 500 6 500 300 550 900 7 800 8 610 100 700 600 9 770 -100 10 790 6,000 -300

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