Solutions & Discussion
Problems and Exercises:
Unit Two: Assignment 4: Web Problem U2-A4-P2
Consider the following cost and revenue data for a hypothetical firm:
|
Q |
PRICE |
TR |
MR |
MC |
|
100 |
|
$ 3476 |
|
$18.00 |
|
200 |
|
$ 6700 |
|
$14.00 |
|
300 |
|
$ 9678 |
|
$12.00 |
|
400 |
|
$ 12400 |
|
$12.00 |
|
500 |
|
$ 14880 |
|
$12.00 |
|
600 |
|
$ 17100 |
|
$13.00 |
|
700 |
|
$ 19082 |
|
$14.00 |
|
800 |
|
$ 20800 |
|
$16.00 |
|
900 |
|
$ 22284 |
|
$19.00 |
|
1000 |
|
$ 23500 |
|
$23.00 |
|
1100 |
|
$ 24464 |
|
$28.00 |
Fill in the price column (P x Q = TR or P = TR/Q)
Fill in the MR column. Note that you can enter a number in the top row: Q goes from zero to 100 and TR from zero to $3476. As you know, MR and MC are figured on a per unit basis.
As a monopolist, how much will this firm produce and how much will it charge? Use MR = MC.
At the price you just determined, if this firm was transferred into pure competition, then how much would it produce? Remember, P = MR in pure competition. Then use MR = MC. Note: When you transfer the firm into pure competition, you should still use the same marginal cost data.)
Answers: The monopolist will produce 800 and charge $26. If transferred into perfect competition, the firm would produce Q = 1000.
You should now be ready for
Exam # 2. Good Luck!
