I have the answers, but I don\'t understand how they got them......Please help!
ID: 1214941 • Letter: I
Question
I have the answers, but I don't understand how they got them......Please help!
Harveys is a single priced monopoly:
The table shows the demand schedule for Harveys: What is Harveys profit-maximizing output, price, and economic profit?
Harveys profit maximizing output is ____ rosebushes an hour. (answer is 3)
Harveys profit maximizing price is $____ a rosebush. (answer is 12)
When Harveys produces the profit maximizing output and charges the profit maximzing price, economic profile is $_____ an hour. (answer is 17)
Price Quantity Total Cost
$ per bush bushes per hour $ per hour
15 0 1
14 1 5
13 2 11
12 3 19
11 4 29
10 5 41
Thank You
Explanation / Answer
PROFIT MAXIMIZATION CONDITION IS MC=MR
SINCE MC=MR AT 3.5 BUT THE DICTRIBUTION IS DISCRETE NOT CONTINUOUS THEREFORE PROFIT MAX OUPUT IS AT 3
WHERE PRICE IS 12 AND MAX PROFIT IS 17
PROFIT=TR-TC
TR=P*Q
MR=TR(N)-TR(N-1)
MC=TC(N)-TC(N-1)
P Q TC TR MR MC PROFIT 15 0 1 0 -1 14 1 5 14 14 5 9 13 2 11 26 12 6 15 12 3 19 36 10 8 17 11 4 29 44 8 10 15 10 5 41 50 6 12 9