This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: demand is linear) that marginal revenue has the same vertical intercept as demand and twice the slope. Use the information from the graph to fill out the rest of the marginal revenue column in the table. (d) Revenue is maximized at a quantity of 3 units where price is 3 dollars and marginal revenue is dollars. (e) Suppose your ATC = MC = $2 for all Q . Plot your MC in the graph below. 2-6-5-4-3-2-1 1 2 3 4 5 6 7 8 0 1 2 3 4 5 6 7 8 9 10 D Q $ (f) The profit-maximizing monopoly quantity is where MR = MC. Using this rule, the monopoly quantity is 2 units. (g) The monopoly price is 4 dollars. (h) The monopoly profit is 4 dollars. (i) Illustrate the monopoly profit in your graph. (j) Fill in the table below. Illustrate the change in total surplus in the graph above. Label it DWL (for dead weight loss of monopoly). Competition Monopoly Change (moving from competition to monopoly) Q 4 2 -2 P 2 4 +2 CS 8 2 -6 PS 0 4 +4 TS 8 6 -2 MR MC Profit DWL of Monopoly...
View Full Document