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(Scenario: A Small-Town Monopolist) Use Scenario: A Small-Town Monopolist. If this monopolist must choose between selling 100 or 175 subscriptions, it will choose to sell _____ units at a price of _____ and earn economic profits equal to _____. Scenario: A Small-Town Monopolist A monopolist sells cable subscriptions in a small town and finds that it can sell 100 subscriptions when the price is $15 a week and 175 subscriptions when the price is $10 a week. The MC for the provision of the cable is $5 a week. There are no fixed costs.

Sagot :

batolisis

Answer:

100 units , $15 , $1000

Explanation:

Marginal cost = $5

Number of subscriptions = 100   $15 a week

Number of subscriptions = 175   $10 a week

Determine the number of units  to be sold between 100 and 175 units

when he sells 100 units

Revenue = price * quantity = 15 * 100 = $1500

missed opportunity = MC * Q = 5 * 100 = $500

profit made = Revenue - missed = $1500 - $500 = $1000

When he sells 175 units

Revenue = price * quantity = 10 * 175 = $1750

missed opportunity = MC * Q = 5 * 175 = $875

profit made = Revenue - missed = $1750 - $875 = $875

Therefore to earn maximum profit ;

sell 100 units at $15 and make an economic profit = $1000

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