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Pure Monopoly Calculation

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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

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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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Pricing in Monopoly and Pure Competition

Need help with this micro problem

Let's say the cost function and the demand function of a monopolistic firm are as follows.

C=10+q^2
p=20-q

A) what is the price and output this monopolistic firm will produce?
B) what will be the price and quantity of the government mandated that this monopolist behaves as a perfect competitor (charges price of a perfect competitor and sells quantity of a perfect competition)?
C)what is the PS,CS, and total welfare when in perfect competition? Compute the numerical value of PS, CS and TW.
D) What is the PS, CS, and total welfare is monopoly? Compute numerical values.
E) compute the deadweight loss when you move from perfect competition to monopoly?
F) if the government sets a price of p=10, what is the new price and quantity.

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