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Pure Monopoly Calculation

Use the following data for a pure monopoly to calculate the firm's: (a) total revenue, marginal revenue, marginal costs, and average total cost; (b) its profit-maximizing output level and produce price; (c) its profit. (d) Use the price-cost formula to determine whether or not the firm's operations are productively-efficient. (e) Use the price-cost formula to determine whether or not the firm's operations are allocatively efficient.

Q (P = AR) TR MR TC MC ATC

0 $ 0 $ 60

1 58 100

2 57 136

3 56 168

4 55 200

5 54 235

6 53 276

7 52 322

8 51 376

Solution Preview

See the attached Excel file for calculations. The text here may not be correctly formated. Hope this will help. Thanks

Part a)
Q Change in output P=AR TR Change in TR MR TC Change to ...

Solution Summary

The price cost formula determines whether or not the firm's operations are allocatively efficient. Product maximizing output level, product price, profit, average cost minimization, and where the firm is not allocatively efficient.

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