Monopoly and MR p The Smith Shirt Co. has obtained an exclusive license to be th
ID: 1205377 • Letter: M
Question
Monopoly and MR
p
The Smith Shirt Co. has obtained an exclusive license to be the sole official producer of soccer shirts with team logos. The costs in this table remain as before - outputs, cost, revenue, and profit are daily figures. The price and quantity numbers are derived from the market deman for soccer shirts.
1) Complete the table and show all work for how you found TR, MR and Profit for a monopoly.
p
q=Q TFC TVC TC ATC MC TR MR Profit 67.5 0 96 0 96 .. .. ? ? ? 45 5 96 37.5 133.5 26.7 15 ? ? ? 40.5 6 96 54 150 25 18 ? ? ? 36 7 96 73.5 169.5 24.21429 21 ? ? ?Explanation / Answer
for instance
WHEN Q = 5 and P = 45, TR = P*Q = 45 * 5 = $225
MR = TR2 (when q = 5)- TR1( when q = 0) = 225 - 0 = $225
PROFIT = TOTAL REVENUE - TOTAL COST = 225 - 133.5 = $ 91.5
NOTE: when the monopolist doesn't charge different price for different quantities, than the method for calculating the profit for the monopolist and that for a competitive firm happens to be the same.
P Q TFC TVC TC ATC MC (= ATC2-ATC1) TR(= p*q) MR(= TR2-TR1) PROFIT(= TR-TC) 67.5 0 96 0 96 - 96 0 - -96(LOSS) 45 5 96 37.5 133.5 26.7 37.5 225 225 91.5 40.5 6 96 54 150 25 16.5 243 18 93 36 7 96 73.5 169.5 24.21 19.5 252 9 82.5