handout6a

# handout6a - For Part(A P TR TC TFC = \$1 Q Max 2 Bottles Q...

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Handout 6 Answers : Pure Monopoly A) Q P TR MR MC TC Total Profit or Loss 0 \$10 - - - \$ 1 \$ -1 1 8 \$8 \$8 \$2 3 + 5 2 6 12 4 4 7 + 5 3 4 12 0 6 13 - 1 4 2 8 -4 8 21 - 13 5 0 0 - 8 10 31 - 31 B) Rest of table above is needed for part (B) Q = 2 P = \$6 Total Profit = \$5 Q TC TFC TVC ATC AVC 0 \$1 \$1 \$0 - - - - - - 1 3 1 2 3 2 2 7 1 6 3.5 3 3 13 1 12 4.3 4 4 21 1 20 5.25 5 5 31 1 30 6.2 6 See also table in part (A)

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Unformatted text preview: For Part (A) P TR TC TFC = \$1 Q Max 2 Bottles Q 0 (C) Ï TFC does not ∆ output choice. Still MR = MC @ 2 units. But the firm now has TC = TR = \$12 ( Ï TFC = \$5) and breaks even. If TFC Ï BY \$10, then firm loss minimizes at MR = MC @ 2 units (see table below) Q New Total Profit or Loss 0 - 11 1 - 5 2 - 5 3 - 11 4 - 23 5 - 41 \$ MR ATC z \$3.50 P Max \$6 Q Max 2 Bottles Q 0 z A B MC AVC P=AR=D...
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