Suppose that a monopolist farm's demand curve is given by p=210-4y and it faces a constant marginal cost of $10. Answer the following questions:
a) what is the profit maximization output for this monopolist? how much total revenue does it earn at this profit maximization level of the output?
b) Suppose that the marginal cost increases to $20. How does total revenue change?
c) Now consider a perfectly competitive industry with a constant marginal cost of $10 for each rm. Find the optimal level of market output and the corresponding price in this industry.
d) Suppose that the marginal cost of each rm in this perfectly competitive industry increases to $20. How does total industry revenue change?
e) Compare and discuss your answers to parts (b) and (d).
Suppose that a monopolist farm's demand curve is given by p=210-4y and it faces a constant marginal cost of $10. Answer the following questions:
a) what is the profit maximization output for this monopolist? how much total revenue does it earn at this profit maximization level of the output?
b) Suppose that the marginal cost increases to $20. How does total revenue change?
c) Now consider a perfectly competitive industry with a constant marginal cost of $10 for each rm. Find the optimal level of market output and the corresponding price in this industry.
d) Suppose that the marginal cost of each rm in this perfectly competitive industry increases to $20. How does total industry revenue change?
e) Compare and discuss your answers to parts (b) and (d).
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Related questions
The following table shows the total cost schedule for a perfectly competitive firm. The current price in this industry is $20. Fill in the marginal revenue and marginal cost columns of the table. (Enter your response as an integer.)
| Output (units) (Q) | Total Cost (TC) | Marginal Revenue (MR) | Marginal Cost (MC) |
| 0 | 40 | - | - |
| 1 | 45 | ||
| 2 | 55 | ||
| 3 | 70 | ||
| 4 | 90 | ||
| 5 | 115 |
How I calculate this?
