Analyze the given graph and calculate the asked values for a monopolist and a pe
ID: 1226319 • Letter: A
Question
Analyze the given graph and calculate the asked values for a monopolist and a perfectly competitive firm:
1. For the Monopolistic Firm:
a. Profit maximizing output =
b. Average total cost (ATC) =
c. Average revenue (AR) =
d. Price =
e. Total revenue =
f. Total cost =
g. Profit =
2. For the Perfectly Competitive Firm:
a. Profit maximizing output =
b. ATC =
c. AR =
d. Price =
e. Total revenue =
f. Total cost =
g. Profit =
Explain briefly the differences between the monopolistic and the perfectly competitive firm that you observed in your answers above.
Analyze the given graph and calculate the asked values for a monopolist and a perfectly competitive firm: Price and cost per unit $30 MC ATC 21 18 8 MR 0 20 33 35 40 Quantity 1. For the Monopolistic Firm:Explanation / Answer
For the monopolistic firm:
a. Profit maximizing output occurs where MR = MC .So profit maximizing output is 20
b.Average total cost (ATC) = 18
c. Average revenue (AR) = (30 * 20) = 600
d. Price = $30 . from the intersection of MR and MC and from the demand curve we get this price
e.Total revenue = average revenue - average cost
so, (30*20) - (18*20) = $240
f. total cost = ATC * Q = 18 * 20 = $360
g. Profit = (P - ATC) * Q
= (30 - 18) * 20 = $240
For the Perfectly Competitive Firm:
In case of PC market, the equilibrium condition is P=MR=AR
but from this diagram we could not find any condition like that.So we are unable to find all this things.