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Math Help - please help me with my economics h.w

  1. #1
    Junior Member
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    canada
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    please help me with my economics h.w

    hello, how is doing everybody
    could somebody please give me a hand

    please check this graph





    the blue line represents the demand
    the red line represents the marginal cost
    and the orange line represents the marginal revenue


    There's a theory in economics which says a monopolist will maximizes profits by choosing the level where marginal revenue equal marginal cost, marginal revenue is the change in total revenue as result of producing one more unit of out, and marginal cost the change in total cost as result of producing one more unit of output.

    the question is. If the goal of the monopolist is to maximize profit, how many units will it produce and at what price will charge each unit? ( according to the graph )




    I really appreciate your help.
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  2. #2
    Grand Panjandrum
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    someplace
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    Quote Originally Posted by jhonwashington View Post
    hello, how is doing everybody
    could somebody please give me a hand

    please check this graph





    the blue line represents the demand
    the red line represents the marginal cost
    and the orange line represents the marginal revenue


    There's a theory in economics which says a monopolist will maximizes profits by choosing the level where marginal revenue equal marginal cost, marginal revenue is the change in total revenue as result of producing one more unit of out, and marginal cost the change in total cost as result of producing one more unit of output.

    the question is. If the goal of the monopolist is to maximize profit, how many units will it produce and at what price will charge each unit? ( according to the graph )




    I really appreciate your help.
    If the monopolist prices his widget at $4 he will sell 3000 units, the cost
    of producing the 3001-st unit will be an additional $4 which is equal to his
    additional revenue (in fact slightly less than the additional revenue as it is
    falling per unit as the sales rise), so it is not worth the effort of producing
    that extra unit at that price.

    At $4 per unit he could have sold 6000 units but the revenue per unit
    at this level of sales would have been negative.

    RonL
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