Suppose that a pure monopolist can sell 15 units of output at $6 per unit and 16 units at $5

Economics Dec 11, 2020

Suppose that a pure monopolist can sell 15 units of output at $6 per unit and 16 units at $5.70 per unit. For the monopolist to profitably produce and sell the sixteen unit of output, its marginal cost must be anywhere at or below:

1) 5.70

2) 1.20

3) 1.80

4) 6

Expert Solution

Marginal cost= $1.20

Explanation:

Total revenue from selling 15 units= 6* 15 = 90

Total revenue from selling 16 units = 5.70* 16 = 91.2

Marginal revenue for the sixteenth unit = 91.2- 90 = 1.20

So,

As we know MR= MC

MC will be 1.20

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