Consider a monopolist facing the following situation:
|
Quantity
|
0
|
10
|
20
|
30
|
40
|
50
|
60
|
70
|
|
Price
|
$50
|
$45
|
$40
|
$35
|
$30
|
$25
|
$20
|
$15
|
|
Marginal Revenue
|
$50
|
$40
|
$30
|
$20
|
$10
|
$0
|
$.10
|
$.20
|
|
Total Cost
|
$100
|
$350
|
$525
|
$700
|
$925
|
$1225
|
$1650
|
$2250
|
|
Marginal Cost
|
$30
|
$20
|
$15
|
$20
|
$25
|
$35
|
$50
|
$70
|
|
Average Total Cost
|
|
$35
|
$26.3
|
$23.3
|
$23.1
|
$24.5
|
$27.5
|
$32
|
A) Graph the following:
Demand Curve
Marginal Revenue Curve
Marginal Cost Curve
Average Total Cost Curve
B) Identify the profit maximization point for the monopolist. What are the price and quantities that will maximize profit? What is the total profit received at this point?
C) Suppose you were the regulator of this monopoly and you wished to set price and quantity at the perfectly competitive price and quantity, what would those values be?
D) Compare the results you got in B with the results in C.