mic

Pure Monopoly

Extra Credit Worksheet

The following data is for a purely monopolistic firm and is valid in the short run.


60

70

Price

Quantity Demanded

Total Revenue – Single Price Monopolist

Marginal Revenue – Single Price Monopolist

Total Revenue – Perfect Price

Discrimination

Marginal Revenue – Perfect Price

Discrimination

Average Total Cost

Marginal Cost

$

1

6

2

0

152

1

$1

9

0.00

$

10

0

1

4

2

2

1

3

5.00

60

132

3

113.33

7

0

122

4

100.00

112

5

94.00

102

6

91.67

8

0

92

7

91.43

90

82

8

93.75

110

72

9

97.78

130

62

10

103.00

150

1. Complete the Total Revenue and the Marginal Revenue columns for the Single Price Monopolist

2. What amount of output will the Single Price Monopolist produce? Why? What price will the Single Price Monopolist charge for its output? What amount of economic profit will the Single Price Monopolist earn? (Show your calculations.

3. Complete the Total Revenue and the Marginal Revenue columns for the Monopolist if is uses perfect price discrimination.

4. What amount of output will the Monopolist produce if it is able to use perfect price discrimination? Why? What amount of economic profit will the Monopolist earn if it is able to use perfect price discrimination? (Show your calculations.)

5. Does price discrimination impact the pure monopolist’s ability to achieve productive efficiency and allocative efficiency? How? Why?

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