Answer to Question #162453 in Economics of Enterprise for Abdul Qadoos

Question

Quantity     Price             Total Cost

10                  20 340

20      17 400

30      15 480

40      13 580

50      12 700

60      11 840

70      9 1,020

80      7 1,280

Calculate Total Revenue

Marginal Revenue

Marginal Cost

Average cost

Q1: How a Monopolistic Competitor Chooses its Profit Maximizing Output and Price. DRAW a graph and explain your answer. 

Answer 1

Q.    Price   TC TR MR MC AC

10       20 340 200

20     17 400 340 14 6 20

30    15 480 450 11 8 16

40    13 580 520 7 10 14.5

50   12 700 600 8 12 14

60    11 840 660 6 14 14

70    9 1,020 630 -3 18 14.5

80   7 1,280 560. -7 26 16

The monopolistic Competitor Chooses its Profit Maximization level where marginal revenue equals marginal cost. It charges the price for that quantity of output as determined by demand curve. If price is above the average cost ,the monopolist earns positive.