APE 33
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Like other producers in a market economy, a pure monopolist tries to maximize profit by producing at an output where marginal cost (MC) equals marginal revenue (MR). For a firm in a competitive market, price and marginal revenue are the same; but for a monopolist, who “sees” the entire market demand curve and who must charge all buyers the same price, marginal revenue is below price. This activity considers the monopolist’s choice of output level.
1.  Refer to the table.  What is the marginal cost at the output of 4? *
Marginal cost is the change in total cost/change in output
1 point
2.  Refer to the table.  What is the average total cost at the output of 6? *
ATC is the average of total cost.  Total cost/output
1 point
3.  Refer to the table.  What is the marginal revenue at the output of 3? *
Marginal revenue is the change in total revenue/change in output
4. Refer to the table.  What is the average revenue (price) at the output of 4? *
Average revenue is the revenue/output
PART B
Use the interactive graph at the bottom of the page OR the table to answer the following.  Tap or roll over the proper place on the graph for the X and Y values.
5. A profit maximizing monopolist would produce________ units. *
Explain why you choose the answer above. *
6.  At the profit maximizing level of output, mc is ____________ per unit and MR is _____________ per unit. *
Answers listed with MC first then MR.
7. At the profit maximizing level of output, ATC is _________ per unit, and AR (price) is ________ per unit. *
Answers listed with ATC first and AR (Price) second.
8. This gives the monopolist an economic profit of __________ per unit for a total economic profit of __________. *
* Answers listed with per unit first and total second.
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