Homework SourseDEX0 Enterprises a monopoly faces the following demand curve
DEX0 Enterprises, a monopoly, faces the following demand curve. DEX is owned by three sisters, Alice, Mary and Claire. At this time the firm faces a constant MC and ATC of $4.00 per unit of their product.
Price
Quantity Demanded
Total Revenue
Marginal Revenue
10
0
8
1
6
3
4
6
2
10
0
15
Complete the table by calculating Total Revenue and Marginal Revenue for this firm.
Alice is would like to see DEX’s product used by as many people as possible. Which price would she choose? How many units would DEX need to produce and distribute if Alice was in charge?
Mary wants to maximize total revenue. What price would she choose? How many units would DEX sell?
Claire wants to maximize profits. What price would she choose? How many units would DEX sell?
| Price | Quantity Demanded | Total Revenue | Marginal Revenue |
| 10 | 0 | ||
| 8 | 1 | ||
| 6 | 3 | ||
| 4 | 6 | ||
| 2 | 10 | ||
| 0 | 15 |
Solution
The required table is as below:
Price
Quantity Demanded
Total Revenue
Marginal Revenue
10
0
0
0
8
1
8
8
6
3
18
10
4
6
24
6
2
10
20
-4
0
15
0
-20
If “A” is in charge:
The price would be chosen as $2, because at this price maximum quantity is demanded. The number units would be 10 at this price.
If “M” is in charge:
The maximum total revenue is $24. Therefore, the corresponding price is $4 and quantity is 6.
If “C” is in charge:
ATC = $4 per unit
Price
Quantity Demanded
Total Revenue
Total Cost
Profit
10
0
0
0
0
8
1
8
4
4
6
3
18
12
6
4
6
24
24
0
2
10
20
40
-20
0
15
0
60
-60
Maximum profit is $6. The corresponding price is $6 and quantity is 3.
| Price | Quantity Demanded | Total Revenue | Marginal Revenue |
| 10 | 0 | 0 | 0 |
| 8 | 1 | 8 | 8 |
| 6 | 3 | 18 | 10 |
| 4 | 6 | 24 | 6 |
| 2 | 10 | 20 | -4 |
| 0 | 15 | 0 | -20 |
