The following are the demand and total cost schedules for Company Town Water, a local monopoly: Output in Gallons Price per Gallon Total Cost 50,000 $0.28 $ 6,000 100,000 0.26 15,000 150,000 0.22 22,000 200,000 0.20 32,000 250,000 0.16 46,000 300,000 0.12 64,000 How much output will Company Town Water produce, and what price will it charge? Will it earn a profit? How much? ( Hint : First compute the firm’s MR and MC schedules.)

BuyFind

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
BuyFind

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992

Solutions

Chapter 12, Problem 2TY
Textbook Problem

The following are the demand and total cost schedules for Company Town Water, a local monopoly:

Output in Gallons Price per Gallon Total Cost
50,000 $0.28 $ 6,000
100,000 0.26 15,000
150,000 0.22 22,000
200,000 0.20 32,000
250,000 0.16 46,000
300,000 0.12 64,000

How much output will Company Town Water produce, and what price will it charge? Will it earn a profit? How much? (Hint: First compute the firm’s MR and MC schedules.)

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Chapter 12 Solutions

Microeconomics: Principles & Policy