Use the table below to answer the following questions: 

Quantity	Demand (Price)	Marginal Revenue	Marginal Cost	Average Cost
1	$1200	1200	500	500
2	1100	1000	275	388
3	1000	800	225	333
4	900	600	250	313
5	800	400	400	330
6	700	200	500	358
7	600	0	700	407

 

1. What is this firm’s profit-maximizing price? What is its profit-maximizing output? 

2. What is the firm’s average profit? What is the firm’s total profit? 

3. If at least one consumer is willing to pay $1200 for this product, why won’t the monopolist charge $1200? 

4. Are there consumers who want the product but are not willing to pay the profit-maximizing price the firm will charge? How can you tell? 

5. If the firm could charge every consumer exactly what that consumer was willing to pay (called perfect price discrimination), would the quantity the firm produced increase, decrease, or remain the same? Would the firm’s profits increase, decrease, or remain the same? Explain your answers.