Table 15-4 A monopolist faces the following demand curve: Price Quantity $30 0 $25 2.5 $20...
Table 15-4
A monopolist faces the following demand curve:
|
Price |
Quantity |
|
$30 |
0 |
|
$25 |
2.5 |
|
$20 |
5 |
|
$15 |
7.5 |
|
$10 |
10 |
|
$5 |
12.5 |
|
$0 |
15 |
Refer to Table 15-4. In order to maximize total revenues, the monopolist should produce
| a. |
12.5 units. |
|
| b. |
7.5 units. |
|
| c. |
10 units. |
|
| d. |
5 units. |
Homework Answers
ANswer
Option b
7.5 units
================
total revenue =P*Q
TR(0)=0*30=0, TR(2.5)=2.5*25=62.5 and so on
| Price | Quantity | TR |
| 30 | 0 | 0 |
| 25 | 2.5 | 62.5 |
| 20 | 5 | 100 |
| 15 | 7.5 | 112.5 |
| 10 | 10 | 100 |
| 5 | 12.5 | 62.5 |
| 0 | 15 | 0 |
The total revenue is maximum when the firm produces 7.5 units of output
Q=7.5 units
Add Answer to:
Table 15-4
A monopolist faces the following demand curve:
Price
Quantity
$30
0
$25
2.5
$20...
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