The data for a monopoly Marginal revenue Average total cost

The data for a monopoly: Marginal revenue Average total cost Marginal cost Total output price 200 180 160 140 200 160 120 80 40 200 126 105.34 60 52 64 80 100 104 132 160 100 80 60 99.20 100 104.58 111.50 -40 -80 a. How many units should this firm produce to maximize its profits? Explain how you arrived at your answer. b. At its profit-maximizing output, what will this firm\'s total costs be? c. At its profit-maximizing output, what will this firm\'s total profits be?

Solution

A.A monopolist is in equilibrium when his MR=MC(80).This is at output=4 and price=140

B.TC=AC*Q

TC=99*4=396

C.Profit=TR-TC

TR=P*Q

TR=140*4=560

Profit=560-396=164.

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