Question

Exhibit I: Price Charged by MSL for Personnel Provided and Cost to MSL
Quantity (Number of Personnel per Facility/House/Building/Apartment)	Price Charged per Person (AR/Demand) (in `)	Average Cost per Person (AC) (in `)
1	25,000	18,000
2	23,000	16,000
3	21,000	14,000
4	19,000	12,750
5	18,000	12,600
6	17,000	13,000
7	16,000	14,143
8	15,000	15,438
9	14,000	16,778
10	13,000	18,100
Prepared by the authors

1. Sketch TR, MR, ATC, TC, and MC on a graph, and highlight the firm’s profit or loss under the condition of monopoly.

Answer 1

Exhibit I: Price Charged by MSL for Personnel Provided and Cost to MSL
Quantity (Number of Personnel per Facility/House/Building/Apartment)	Price Charged per Person (AR/Demand) (in `)	Total Revenue	Marginal Revenue	Average Cost per Person (AC) (in `)	Total Cost	Marginal Cost
1	25,000	25,000	25,000	18,000	18,000	18,000
2	23,000	46,000	21,000	16,000	32,000	14,000
3	21,000	63,000	17,000	14,000	42,000	10,000
4	19,000	76,000	13,000	12,750	51,000	9,000
5	18,000	90,000	14,000	12,600	63,000	12,000
6	17,000	102,000	12,000	13,000	78,000	15,000
7	16,000	112,000	10,000	14,143	99,001	11,001
8	15,000	120,000	8,000	15,438	123,504	25,503
9	14,000	126,000	6,000	16,778	151,002	27,498
10	13,000	130,000	4,000	18,100	181,000	30,000

Total Revenue= price x quantity

Marginal Revenue is the change in TR when one more unit is sold. MR= TRn - TRn-1

Total Cost = ATC x quantity

Marginal Cost is the change in TC when one more unit is produced. MC = TCn - TCn-1

All the points for the curves have been calculated and can be plotted accordingly. A monopolist produces at the point where MR = MC. This will happen at q= 5.6 where MR= MC = 13,000 (approximately). The price charged will be $17,500. Profit will be the area between price charged and ATC graphically.