A monopolist's maximized rate of economic profits is $2 comma 700 per week. Its weekly output is 900 units, and at this output rate, the firm's marginal cost is $39 per unit. The price at which it sells each unit is $49 per unit. at this profit output rates, what are the firm's average total cost and marginal revenue?

Question

Samson Hutchinson

Business

14 July, 04:41

A monopolist's maximized rate of economic profits is $2 comma 700 per week. Its weekly output is 900 units, and at this output rate, the firm's marginal cost is $39 per unit. The price at which it sells each unit is $49 per unit. at this profit output rates, what are the firm's average total cost and marginal revenue?

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Napoleon · Answer 1

Average total cost = $46

Marginal revenue = $33

Explanation:

In this instance the monopolist's total cost is the revenue from sale of one unit less the economic profits per unit

Economic profit per unit = 2,700/900

Economic profit per unit = $3

Average total cost = (Price per unit) - (Economic profit per unit)

Average total cost = 49 - 3 = $46

For this instance marginal revenue is equal to marginal cost.

Marginal revenue = Marginal cost = $39