Compare and contrast what happens to total revenue, total cost,
and profit when the monopolist increases...
Compare and contrast what happens to total revenue, total cost,
and profit when the monopolist increases its price, in both the
elastic and inelastic portions of the demand curve. Repeat for a
decrease in price.
If the demand for a product is inelastic, it means that the quantity demanded of that product does not change significantly in response to changes in the product's price. In this scenario, if the price of the product increases, the total revenue earned by the seller will also increase.
1.A monopolist maximizes profit at the output rate where its
total revenue equals total cost.
True
False
2. To maximize profit, the perfectly competitive firm charges a
price equal to __________ while the monopolist charges a price
__________.
marginal revenue; equal to marginal cost
marginal cost; greater than marginal cost
marginal revenue; less than marginal revenue
average total cost; greater than average total cost
3.Compared to the perfectly competitive firm, the monopolist
faces a demand curve that is ___________________ elastic...
As output increases, total revenue increases, but total costs
also increase. Why does the profit-maximizing level of production
occur at the point where marginal revenue equals marginal cost? Can
this same principle be applied to minimize a loss
Complete Table 1 by computing the Total Revenue, Marginal
Revenue, Total Cost, and Profit columns, each rounded to two
decimal places. The cost of duplicating a video on a DVD and
mailing the DVD, the Marginal Cost, is $5.56. (1 point)
Table 1
Suggested Donation per DVD Request
Anticipated Number of DVD Requests
Total Revenue
Marginal Revenue
Total Cost
Profit
$19.00
0
$15.00
2
$9.50
5
$7.75
9
$3.00
15
$0.00
24
b. The President wants the GSTCG to provide...
Complete Table 1 by computing the Total Revenue, Marginal
Revenue, Total Cost, and Profit columns, each rounded to two
decimal places. The cost of duplicating a video on a DVD and
mailing the DVD, the Marginal Cost, is $5.56. (1 point)
Suggested Donation per DVD Request
Anticipated Number of DVD Requests
Total Revenue
Marginal Revenue
Total Cost
Profit
$19.00
0
$15.00
2
$9.50
5
$7.75
9
$3.00
15
$0.00
24
The President wants the GSTCG to provide videos to generate...
In using the graph for a monopolist, with demand, marginal
revenue, marginal cost, and average total cost curves, explain how
you find the profit maximizing level of output. (Note that this
question asks about OUTPUT. The next question asks about
PRICE.)
Profits are maximized at the quatnity where total revenue is
highest above total cost
Profits are maximized at the quantity where ATC hits its
minimum
Profits are maximized at the quantity where marginal revenue
equals marginal cost
Profits are...
Assume a profit maximizing monopolist faces the following
demand, marginal revenue and cost functions: Demand: P = 400 - 50Q
Total Cost: TC = 100Q Marginal cost MC = 100 Marginal Revenue MR =
400 – 100Qa) Find the profit maximizing output level for the
monopolist.b) At this level of output what price will the monopolist
charge?c) What is the total profit for the monopolist?d) If the monopolist were a revenue maximizer instead of a
profit maximizer, what would be...
Monopoly Discussion Total Revenue and
Elasticity:
The total revenue test shows that the monopolist will avoid
the inelastic segment of its demand schedule. As long as demand is
elastic, total revenue will rise when the monopoly lowers its
price, but this will not be true when demand becomes
inelastic.
At this point (inelastic), what happens to total
revenue? Explain in detail use examples, data, and facts to support
your argument.
Monopolists will expand output only in the elastic
portion of...
Carefully draw the appropriate revenue and cost curves for a
profit-maximizing monopolist, which is indifferent between
producing and not producing in the short-run. Show the
deadweight loss caused by the monopoly. In the long run,
will the firm produce more or less? (8 points)