Market demand for the nuclear substance pluranium is given below, along with the TR for the given demand schedule. Pluranium is supplied to the world market by a monopolist. Suppose that the marginal cost of supplying an extra megatonne of pluranium is $20 and the business has FC=$60. Price Quantity Total Revenue $80 $70 $60 $50 $40 $30 $20 $10 $0 0 1 2 3 4 5 6 7 8 $0 $70 $120 $150 $160 $150 $120 $70 $0 What is the profit-maximizing profit the monopolist will make?
Market demand for the nuclear substance pluranium is given below, along with the TR for the given demand schedule. Pluranium is supplied to the world market by a monopolist. Suppose that the marginal cost of supplying an extra megatonne of pluranium is $20 and the business has FC=$60. Price Quantity Total Revenue $80 $70 $60 $50 $40 $30 $20 $10 $0 0 1 2 3 4 5 6 7 8 $0 $70 $120 $150 $160 $150 $120 $70 $0 What is the profit-maximizing profit the monopolist will make?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Market demand for the nuclear substance pluranium is given below, along with the TR for the given
demand schedule. Pluranium is supplied to the world market by a monopolist. Suppose that the
marginal cost of supplying an extra megatonne of pluranium is $20 and the business has FC=$60.
Price Quantity Total Revenue
$80
0
$70
1
$60
2
$50
3
1
$40
4
$30
5
$20
6
$10
7
$0
8
What is the profit-maximizing profit the monopolist will make?
$0
$70
$120
$150
$160
$150
$120
$70
$0
Expert Solution
Step 1
The marginal cost of supplying megatonne of pluranium is $20
Fixed cost FC=$60
We know TC=VC+FC
For monopolists, profit maximization condition: MR=MC
So we need marginal revenue for pluranium.
From the demand data, it is clear that the demand curve is linear.
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