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    Determining profit maximzing price and output level

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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

    C1~Q C2~PRICE C3~Total Cost
    C=column

    © BrainMass Inc. brainmass.com October 9, 2019, 10:57 pm ad1c9bdddf
    https://brainmass.com/economics/pricing-output-decisions/determining-profit-maximzing-price-and-output-level-239133

    Solution Preview

    Please refer attached file for better clarity of tables and formulas.

    Solution:
    a)

    Q P=AR TR MR TC MC ATC Profit TR-TC
    0 0 0 60 -60
    1 58 58 58 100 40 100 -42
    2 57 114 56 136 36 68 -22
    3 ...

    Solution Summary

    Solution describes the steps for determining profit maximizing output and price level for a pure monopoly firm. It also determines whether firm's operations are productively and allocatively efficient.

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