Question
A) Why is price equal to marginal revenue for a perfectly competitive firm but not for a monopolist? B) Given Table 1, what can you
A) Why is price equal to marginal revenue for a perfectly competitive firm but not for a monopolist?
B) Given Table 1, what can you conclude about the structure of the industry in which this firm is operating? Explain. (4
Table 1: Lin's Firm (Hypothetical Data)
Price | Quantity | Total revenue (TR) | Marginal revenue (MR) | Average fixed cost | Average variable cost | Average total cost | Marginal cost |
($) | demanded | ($) | ($) | ($) | ($) | ($) | ($) |
100 | 1 | 100 | 100 | 60.00 | 45.00 | 105.00 | 45 |
83 | 2 | 166 | 66 | 30.00 | 42.50 | 72.50 | 40 |
71 | 3 | 213 | 47 | 20.00 | 40.00 | 60.00 | 35 |
63 | 4 | 252 | 39 | 15.00 | 37.50 | 52.50 | 30 |
55 | 5 | 275 | 23 | 12.00 | 37.00 | 49.00 | 35 |
48 | 6 | 288 | 13 | 10.00 | 37.50 | 47.50 | 40 |
42 | 7 | 294 | 6 | 8.57 | 38.57 | 47.14 | 45 |
37 | 8 | 296 | 2 | 7.50 | 40.63 | 48.13 | 55 |
33 | 9 | 297 | 1 | 6.67 | 43.33 | 50.00 | 65 |
29 | 10 | 290 | - 7 | 6.00 | 46.50 | 52.50 | 75 |
C) Given Table 1, determine the profit maximizing price and output.
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