Patty\'s Games sells PlayStation 4 game consoles in a monopolestic compettion in
ID: 1138746 • Letter: P
Question
Patty's Games sells PlayStation 4 game consoles in a monopolestic compettion industry 6 a) Fill in the table as the change in revenue divided by the change in quantity sold with the revenue, marginal revenue, and marginal cost for each level of output (Marginal revenue is calculated here 10 Quantity Price Revenue Marginal R evenue Total Cost Marginal Cost $700 5675 $650 $100 $250 875 $1,525 $2.250 1300 625 625 500 s50 $2200 Retesences b) How many PlayStation 4's will Patty sell in order to maxinize profits? How much profit or loss will Patty make? SExplanation / Answer
Answer 6
a) Revenue, MR and MC calculated above are correct
Revenue(TR) = P*Q
MR(Q) = TR(Q+1) - TR(Q)
MC(Q) = TC(Q+1) - TC(Q)
b)
Profit Maximizing Condition:
A firm should produce and sell that quantity at which Marginal Revenue(MR) = Marginal Cost(MC)
We can see from the above table that Marginal Revenue = Marginal Cost when Q = 2
Hence Patty will sell 2 units in order to maximize Profit.
At Q = 2, Profit = Total Revenue - Total Cost = 1300 - 875 = 425.
Hence he will make profit of $425