Monopoly Data

Spring 2018 Reven

Microeconomics Course Assignment $60.00
In fulfillment of Course ePortfolio and CSIS requirement
$50.00

Part 2 Monopoly Profit Maximizing Analysis $40.00

$30.00
Price Per Average
Total Unit Total Total Total Marginal Marginal
Output (Demand Revenue Total Cost Profit Costs Costs Revenue $20.00
Units ) (TR) (TC) (TP) (ATC) (MC) (MR)
$10.00
0 $7.10 $0.00 $9.00 -$9.00 N/A N/A N/A
1 $6.90 $6.90 $13.00 -$6.10 $13.00 $4.00 $ 6.90 $0.00
1 2 3 4 5
2 $6.70 $13.40 $16.60 -$3.20 $8.30 $3.60 $ 6.50
Total Re
3 $6.50 $19.50 $19.85 -$0.35 $6.62 $3.25 $ 6.10
4 $6.30 $25.20 $22.90 $2.30 $5.73 $3.05 $ 5.70
5 $6.10 $30.50 $25.80 $4.70 $5.16 $2.90 $ 5.30
6 $5.90 $35.40 $28.60 $6.80 $4.77 $2.80 $ 4.90 Monopol
7 $5.70 $39.90 $31.35 $8.55 $4.48 $2.75 $ 4.50 $14.00
8 $5.50 $44.00 $34.20 $9.80 $4.28 $2.85 $ 4.10
9 $5.30 $47.70 $37.40 $10.30 $4.16 $3.20 $ 3.70 $12.00
10 $5.10 $51.00 $41.80 $9.20 $4.18 $4.40 $ 3.30 $10.00
11 $4.90 $53.90 $47.80 $6.10 $4.35 $6.00 $ 2.90
$8.00
12 $4.70 $56.40 $56.80 -$0.40 $4.73 $9.00 $ 2.50
Profit-maxinizing level of Output $6.00
Correct level of
Monopolistic Competition long run Output $4.00

$2.00

$0.00
1 2 3 4
Price Per Unit (Dema
Marginal Costs (MC)

Long Run equilibrium normal profit

MC= Marginal Cost

AC= Average Cost

Price
Demand=(AR) Average Revenue

MR= Marginal Revenue

 Quantity

Monopolistic Competition Long Run

A monopolistic competitive firm will maximize its profits by producing
goods to the point where its marginal revenue equals its marginal costs.
The profit-maximizing quantity amount falls on the average revenue
curve. In the long run, a firm in a monopolistic competitive market will
product the amount of goods where the marginal cost intersects marginal
revenue. The price will be set where the quantity produced falls on the
average revenue. Therefore the result in long-term the firm will break
even.
 Revenue-Cost Comparison
$60.00

$50.00

$40.00

$30.00

$20.00

$10.00

$0.00
1 2 3 4 5 6 7 8 9 10 11 12 13
Total Revenue (TR) Total Cost (TC)

Monopoly Profit Determination

$14.00

$12.00

$10.00 M
C
$8.00

$6.00

$4.00
MR
$2.00

$0.00
1 2 3 4 5 6 7 8 9 10 11 12
Price Per Unit (Demand) $7.10 Average Total Costs (ATC) N/A
Marginal Costs (MC) N/A Marginal Revenue (MR) N/A

The characteristics of Monopoly market structure are as follows:

1. Large number of sellers offering similar product

- Small Market Structure
- No collusion
- Independence
2. Differentiated products
- Similar but distinguishable
- Product Substitutability and price elasticity of demand
3. Sales promotion and advertising
4. Easy entry of new firms