pm4aS07

# pm4aS07 - Additional Problem 4 Pure Monopoly and Perfect...

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Additional Problem 4 : Pure Monopoly and Perfect Price Discriminating Monopoly 1. Given the following output (Q), price = average revenue (P=AR), and total cost (TC) data facing a firm, complete the questions that follow. Total Economic Q P=AR TR TC Profit or Loss MR MC ATC 0 \$34 \$ 0 \$ 20 \$ -20 1 32 32 36 - 4 \$32 \$16 \$ 36.00 2 30 60 46 14 28 10 23.00 3 28 84 50 34 24 4 16.67 4 26 104 54 50 20 4 13.50 5 24 120 56 64 16 2 11.20 6 22 132 68 64 12 12 11.33 7 20 140 80 60 8 12 11.43 8 18 144 100 44 4 20 12.50 a) Is the market structure here perfect or imperfect competition? Imperfect . Explain your reasoning for this answer below. P = AR > MR To Q must P Is the firm operating in the short run or long run? Short Run . Give two reasons for this conclusion. Presence of fixed costs, TFC = \$20. Diminishing returns, MC ing b) What is the equilibrium output for this firm? 6 . What is the equilibrium price for this firm? 22 . Confirm your answer by both the total and marginal approaches. Offer a brief explanation of the equilibrium conditions for both approaches.

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## This note was uploaded on 10/26/2009 for the course ECON 180-004-20 taught by Professor Bresnock during the Fall '09 term at UCLA.

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pm4aS07 - Additional Problem 4 Pure Monopoly and Perfect...

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