ECN3100 Principles of Economics

(3 Jam kredit)
Dr. Mohd Naseem Niaz Ahmad, Tel: 03-8946 7776,
Email: naseemniaz@upm.edu.my, Room: D003 Fakulti Ekonomi dan Pengurusan
Assignment 7: Monopoly

1. Ron's Hamburger Joint is the only restaurant in town. The above figure represents Ron's cost,
demand, and marginal revenue curves. Ron operates as a single-price monopoly.
a) How many hamburgers does Ron produce?
b) What price does Ron charge for a hamburger?
c) What is Ron's total revenue?
d) What is his total cost?
e) What is Ron's economic profit?

Price
(dollars per
ounce)
100
200
300
400
500
600
Quantity
produced
(ounces per
day)
9
20
40
60
80
100

Quantity
demanded
(ounces per day)
100
80
60
40
20
0

Total cost
(dollars per day)
6,000
7,200
8,800
10,800
13,200
16,000

2. Anastasia's Gold Mines, a single-price monopoly, faces the demand schedule shown in the
first table above and has the cost schedule shown in the second table above.
a) Calculate Anastasia's marginal revenue schedule. In a figure, draw the demand curve and
the marginal revenue curve.
b) Calculate Anastasia's marginal cost and average total cost schedules. In the same figure
that you drew the demand and marginal revenue curves, draw the marginal and the
average total cost curves.
c) What are Anastasia's profit-maximizing output and price? What is Anastasia's economic
profit? Explain your answer.
d) At the price charged, is the demand for newspapers elastic or inelastic? Explain your
answer.