Question

Monopoly: Fantastic Films is the only movie theater in an isolated town. The table below illustrates the demand schedule for movie tickets and the cost schedule for producing the movies. Complete the table. Maximize your browser window to view all columns in the table. Price ($ per ticket) Quantity (tickets per show)

Price ($ per ticket)	Quantity (tickets per show)	Total Revenue (dollars per show)	Marginal Revenue	Total Cost (dollars per show)	Marginal Cost
20	0			1000
18	100			1600
16	200			2200
14	300			2800
12	400			3400
10	500			4000
8	600			4600
6	700			5200
4	800			5800

Sketch a graph of the theater's demand functions, marginal revenue, and marginal cost on a sheet of graph paper. Recall that you will use the midpoint method to plot the marginal functions, MR and MC.

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2)Suppose Fantastic Films charges a single price for all tickets. Identify the monopoly outcome (P_M, Q_M). Calculate the firm's profit maximizing price $ , output  tickets, and economic profit $  .

3)

Compute consumer surplus, producer surplus, and deadweight loss.

Consumer surplus

Producer surplus

Deadweight loss

4)

If the movie theater industry were perfectly competitive, how many tickets would be sold and what would be the price of each ticket? [competitive outcome, (P_comp, Q_comp)]

Competitive price: $ ["$13 per ticket", "$5 per ticket", "$12 per ticket", "$10 per ticket", "$6 per ticket"]         per ticket

Competitive output: ["700 tickets", "800 tickets", "350 tickets", "400 tickets", "750 tickets"]         tickets

Answer 1