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pm3a - Additional Problem 3 Answers Pure Monopoly Widgets...

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Additional Problem 3 Answers: Pure Monopoly Widgets International, a monopolist, faces a demand curve given by the data in the first two columns of the table below. Its marginal and average costs are constant and equal to $3 per widget produced. There are no fixed costs of production. a. Complete the following table for the various production levels; Q P TR MR MC AVC ATC TC Profit 0r Loss 0 $10 $0 1 9 9 9 $3 $3 $3 $3 $6 2 8 16 7 3 3 3 6 10 3 7 21 5 3 3 3 9 12 4 6 24 3 3 3 3 12 12 5 5 25 1 3 3 3 15 10 6 4 24 -1 3 3 3 18 6 7 3 21 -3 3 3 3 21 0 8 2 16 -5 3 3 3 24 -8 9 1 9 -7 3 3 3 27 -18 10 0 0 -9 3 3 3 30 -30 b. What level(s) of production will maximize profit of Widgets International? Q = 4 Total Profit = $12 c. What are the values of MR and MC at the profit maximizing level(s) of production?
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