price quantity Total revenue Marginal revenue Total Cost profit $20 1

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Presentation transcript:

price quantity Total revenue Marginal revenue Total Cost profit $20 1 19 2 18 3 17 4 16 5 15 6 14 7 13 8 12 9 11 10 20

price quantity Total revenue Marginal revenue Total Cost profit $20 1 - $14 $6 19 2 38 $18 28 10 18 3 54 16 42 12 17 4 68 14 56 5 80 70 15 6 90 84 7 98 8 13 104 112 -8 9 108 126 -18 11 110 140 -30 154 -44 -2 -4 -6 -10 -12 -14 -16 20

$20 Whole dollar amounts of individual consumer surplus at a market price of $14 (6+5+4+3+2+1)= 21 or 3½ x6=21 6 $17 5 4 3 2 1 $14 $10 AR, (D) MR 4 7 11

$20 Whole dollar amounts of individual consumer surplus at a market price of $17 3+2+1=6 or 2x3=6 3 2 1 $17 $14 $10 AR, (D) MR 4 11

P The monopolistic firm would produce output, where MR=MC (P>MR) because MR lies below demand $20 $17 The competitive firm would produce output, where P=MC (P=MR) because MR is equal to D AC, MC $14 $10 price AR, (D) MR Q 4 7 11