Explore BrainMass

Marginal revenue and monopoly

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

The accompanying diagram shows the demand, marginal revenue, and marginal cost of a monopolist. Below the graph is the market demand curve.

TABLE Showing Market Demand
Price Quantity Total Revenue Average Revenue
18 10 ------------ -------------------
17 15 ----------- ------------------
16 20 ----------- ------------------
15 25 ------------ ------------------
14 30 ------------ ------------------
13 35 ------------ ------------------
12 40 ------------ ------------------
11 45 ------------- -------------------

a. Complete the columns for Total Revenue and Average above

b. What level of output should this monopolist produce? Explain how you have arrived at your answers. Next, show your answers in the graph above?

c. What price should this monopolist charge? Explain how and then show your answers in the graph above.

d. What price and output would prevail if this firm's product were sold price-taking firms in a perfectly competitive market? First explain and then show your result using the above graph.

© BrainMass Inc. brainmass.com March 22, 2019, 3:46 am ad1c9bdddf


Solution Summary

The solution provides detailed analysis of the question and shows all the steps to compute the results.