Problem Set 8

Problem Set 8 - numbers here b Indicate on the graph the...

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Chapter 12 You don’t need to turn in this homework. 1. The graph below represents the demand curve facing a monopolist along with the firm’s average total cost and marginal cost curves. 0 50 100 150 200 250 300 \$0 \$2 \$4 \$6 \$8 \$10 \$12 \$14 \$16 \$18 \$20 Quantity of output Cost MC ATC Demand a. What is the firm’s profit-maximizing output? b. What is the firm’s profit-maximizing price? c. Shade in the profit the monopolist earns.

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2. The graph below shows the demand curve facing a monopolist along with its marginal and average total costs. 0 50 100 150 200 250 300 \$0 \$2 \$4 \$6 \$8 \$10 \$12 \$14 \$16 \$18 \$20 Quantity of output Cost MC ATC Demand a. Indicate on the graph the level of output and price the monopolist would set. Write those
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Unformatted text preview: numbers here: b. Indicate on the graph the level of output and price if this were a perfectly competitive industry. Write those numbers here: c. Shade in the deadweight loss caused by the monopolist. Why is there deadweight loss? 3. Use the following table that shows the demand curve facing a monopolist along with some cost figures also faced by the monopolist. Quantity Price Total cost 0 20 1 125 115 2 115 200 3 103 275 4 93.50 340 5 85 395 6 77.50 440 a. What is the profit maximizing level of output? b. What price will the monopolist set? c. What will be the monopolists profit?...
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Problem Set 8 - numbers here b Indicate on the graph the...

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