Chapter 15 Homework Answer Keys - 308 5 Chapter 15/Monopoly...

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308 ) Chapter 15/Monopoly 5. a. The following table shows total revenue and marginal revenue for each price and quantity sold: Price Quantity Total Revenue Marginal Revenue Total Cost Profit 24 10,000 \$240,000 ---- \$50,000 \$190,000 22 20,000 440,000 \$20 100,000 340,000 20 30,000 600,000 16 150,000 450,000 18 40,000 720,000 12 200,000 520,000 16 50,000 800,000 8 250,000 550,000 14 60,000 840,000 4 300,000 540,000 b. Profits are maximized at a price of \$16 and quantity of 50,000. At that point, profit is \$550,000. c. As Johnny's agent, you should recommend that he demand \$550,000 from them, so he receives all of the profit (rather than the record company). 6. a. The table below shows total revenue and marginal revenue for the bridge. The profit- maximizing price would be where revenue is maximized, which will occur where marginal revenue equals zero, because marginal cost equals zero. This occurs at a price of \$4 and quantity of 400. The efficient level of output is 800, because that is where price is equal

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This note was uploaded on 04/26/2011 for the course ECON 201 taught by Professor Joyce during the Spring '07 term at Drexel.

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Chapter 15 Homework Answer Keys - 308 5 Chapter 15/Monopoly...

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