Answered: 3,600.0 3,400.0 3,200.0 3,000.0 2,800.0…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Below is a representation of the demand curve for diamonds. Assume DeBeers is operating as a monopoly.

1. As a monopolist, what is the total effect of a price change from $2,400 to $1,600 on revenue? Break this change into an increase and a decrease.

If you were to do exercise 1 in for every marginal change in price, you would find the marginal revenue curve. The marginal revenue diagram has been provided for the next exercises, along with the marginal costs for DeBeers.

3,600.0
3,400.0
3,200.0
3,000.0
2,800.0
2,600.0
2,400.0
2,200.0
2,000.0
1,800.0
1,600.0
1,400.0
1,200.0
1,000.0
800.0
600.0
400.0
Di
200.0
0.0
O 20 40 60 80 100 120 140 160 180 200 220 240
Millions of Carats (Diamonds)
Price

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