Consider a monopolist facing the following situation: Quantity 0 10 20 30 40 50 60 70 Price $50…

Consider a monopolist facing the following situation: Quantity 0 10 20 30 40 50 60 70 Price $50…

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.

Consider a monopolist facing the following situation: Quantity 0 10 20 30 40 50 60 70 Price $50…

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