MARKETS WITH MARKET POWER - Tufts University

Table 2:
Production and Costs under Monopoly.
The New Example: continued.
Fixed
Cost =
quantity
of
output
60 price varies with quantity profit schedule
average cost schedule
demand
curve: the
price at
average
fixed
costs
average average
variable total
costs costs
Marginal
Cost
ΔTC/Δq
(bu) ($/bu) ($/bu) ($/bu) ($/bu)
each
quantity
produced.
total
revenue =
p×q
marginal
revenue
= ΔTR/Δq
Total
profit =
(TR–TC)
extra
profit =
(MR –
MC)
($/bu) ($) ($/bu) ($) ($/bu)
q AFC AVC ATC MC AR TR MR
5 12.000 0.800 12.800 0.8 23 115 23 51 22.20
10 6.000 0.600 6.600 0.4 22 220 21 154 20.60
15 4.000 0.600 4.600 0.6 21 315 19 246 18.40
20 3.000 0.750 3.750 1.2 20 400 17 325 15.80
25 2.400 0.920 3.320 1.6 19 475 15 392 13.40
30 2.000 1.100 3.100 2.0 18 540 13 447 11.00
35 1.714 1.286 3.000 2.4 17 595 11 490 8.60
40 1.500 1.475 2.975 2.8 16 640 9 521 6.20
45 1.333 1.667 3.000 3.2 15 675 7 540 3.80
50 1.200 1.860 3.060 3.6 14 700 5 547 1.40
55 1.091 2.055 3.145 4.0 13 715 3 542 -1.00
60 1.000 2.250 3.250 4.4 12 720 1 525 -3.40
65 0.923 2.446 3.369 4.8 11 715 -1 496 -5.80
70 0.857 2.643 3.500 5.2 10 700 -3 455 -8.20
Chapter 12 − Markets with Power 13