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Currently, a monopolist's profit-maximizing output is 200units per week. It sells its output at a price of \(60per unit and collects \)30 per unit in revenues from the sale of the last unit produced each week. The firm's total costs each week are $9,000. Given this information, what are the firm's maximized weekly economic profits and its marginal cost?

Short Answer

Expert verified

The organizations' quarterly macroeconomic revenues were optimum, and they unit benefit became 530.

Step by step solution

01

Introduction

A dominance will be when one organization has a dominant position in an industry or sector with both the purpose of banning all those other potential competitors. Monopolies are often discouraged in free-market nations. Because users do have choice, they are considered as lead to market manipulation and declining product.

02

Given Information

The marginal revenue of the firm from the last unit is $30per unit. Each rate the dealer pays is for each device $60per unit. The business's actual price is a week each$9,000.

03

Explanation

The average total cost is that the cost of the assembly of the per unit good. The marginal revenue is that the addition in total revenue by selling another unit ofthe nice. The divergence expense is really the rise in the overall pricing significantly with the addition among one fewer piece.
Operating income is often defined as the gap in between company's business revenue and capital costs..
The total economic profit of the firm is calculated below:
Profit=Total revenue−Total cost

=$60×200−$9,000

=$12,000−$9,000

=$3,000

The total economic profit of the firm is $3,000.

When economic profit and so therefore cost remain equivalent, firm will produce. Therefore, the differential cost of the firm is 530.

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Most popular questions from this chapter

The marginal revenue curve of a monopoly crosses its marginal cost curve at \(30per unit and an output of 2million units. The price that consumers are willing to pay for this output is \)40per unit. If it produces this output, the firm's average total cost is $43per unit. What is the profit-maximizing (loss-minimizing) output? What are the firm's economic profits (or economic losses)?

For each of the following examples, explain how and why a monopoly would try to price discriminate.

a. Air transport for businesspeople and tourists

b. Serving food on weekdays to businesspeople and retired people- (Hint: Which group has more flexibility during a weekday to adjust to a price change and, hence, a higher price elasticity of demand?

c. A theater that shows the same movie to Large families and to individuals and couples. (Hint: For which set of people will the overall expense of a movie be a larger part of their budget, \(s\) o that demand is relatively more elastic?)

Who gained from passage of the New Jersey law? Explain briefiy.

A new competitor enters the industry and competes with a second firm, which had been a monopolist. The second firm finds that although demand is not perfectly elastic, it is now more elastic. What will happen to the second firm's marginal revenue curve and to its profit-maximizing price?

A manager of a monopoly firm notices that the firm is producing output at a rate at which average total cost is falling but is not at its minimum feasible point. The manager argues that surely the firm must not be maximizing its economic profits. Is this argument correct?

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