• , The following figure shows the demand curve and the marginal revenue (MR) curve of a monopolist supplying petroleum. Price/Cost (S) Demand MR 10 15 20 25 40 60 65 70 75 80 85 90 Quantity (100 gallons) a) If the monopolist faces a constant marginal cost of $3, what is the optimal output that it should produce? b) If the monopolist faces a constant marginal cost of $3, at what price should it sell the optimal output? c) If the average total cost of the monopolist is $4 per liter when it produces the optimal output, determine his profit or loss.

• , The following figure shows the demand curve and the marginal revenue (MR) curve of a monopolist supplying petroleum. Price/Cost (S) Demand MR 10 15 20 25 40 60 65 70 75 80 85 90 Quantity (100 gallons) a) If the monopolist faces a constant marginal cost of $3, what is the optimal output that it should produce? b) If the monopolist faces a constant marginal cost of $3, at what price should it sell the optimal output? c) If the average total cost of the monopolist is $4 per liter when it produces the optimal output, determine his profit or loss.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 33P: Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the...

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