Question

Use the cost and revenue data to answer the questions. Quantity Price Total Revenue Total Cost 15 90 1350 900 30 80 2400 1500 45 70 3150 2250 60 60 3600 3150 75 50 3750 4200 90 40 3600 5400 What is marginal revenue when quantity is 30 ? 30? $ What is marginal cost when quantity is 60 ? 60? $ If this firm is a monopoly, at what quantity will profit be maximized? quantity: If this is a perfectly competitive market, which quantity will be produced? quantity: Comparing monopoly to perfect competition, which statement is true? The perfectly competitive market's ouput is lower. The consumer surplus is smaller with a monopoly. The monopoly's price is higher.

Answer 1

Answer:

What is marginal revenue when quantity is 30 ? 30?

• $70

= ($2,400 - $1,350) / (30 - 15) = $900 / 15 = $70  

What is marginal cost when quantity is 60 ? 60?

• $60

= ($3,150 - $2,250) / (60 - 45) = $900 / 15 = $60

If this firm is a monopoly, at what quantity will profit be maximized?

• quantity: 45 units

a monopoly maximizes its accounting profit when marginal revenue = marginal cost, in this case they both equal $50 per unit when total output is 45 units

If this is a perfectly competitive market, which quantity will be produced?

• quantity: 45 units

a perfectly competitive firm maximizes its accounting profit when marginal revenue = marginal cost, in this case they both equal $50 per unit when total output is 45 units

Comparing monopoly to perfect competition, which statement is true?

• The consumer surplus is smaller with a monopoly.
• The monopoly's price is higher.

In a monopoly, output is smaller than the perfectly competitive output. The price charged by a monopolist is also higher. This also results in lower consumer surplus with a monopoly.

Explanation:

Quantity      Price       Total Revenue            Total Cost

15                 90                   1350                         900

30                80                   2400                      1500

45                70                    3150                      2250

60                60                  3600                       3150

75                50                   3750                      4200

90                40                  3600                      5400