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##### A pure monopolist determines that at the current level of output the marginal cost

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Question;Question 1A pure monopolist determines that at the current level of output the marginal cost of production is \$2.00, average variable costs are \$2.75, and average total costs are \$2.95. The marginal revenue is \$2.75. What would you recommend that the monopolist do to maximize profits?Question 2Assume that the short-run cost and demand data given in the table below confront a monopolistic competitor selling a given product and engaged in a given amount of product promotion. Compute the marginal cost and marginal revenue of each unit of output and enter these figures in the table.Output Total cost Marginal cost Quantity demanded Price Marginal revenue0 \$ 75 0 \$180 1 120 \$_____ 1 165 \$_____2 135 _____ 2 150 _____3 165 _____ 3 135 _____4 210 _____ 4 120 _____5 270 _____ 5 105 _____6 345 _____ 6 90 _____7 435 _____ 7 75 _____8 540 _____ 8 60 _____9 660 _____ 9 45 _____10 795 _____ 10 30 _____(a) Compute the marginal cost and marginal revenue of each unit of output.(b) At what output level and at what price will the firm produce in the short run? What will be the total profit? (16.7 points)(c) What will happen to demand, price, and profit in the long run?

Paper#57082 | Written in 18-Jul-2015

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