Practice problem Monopoly

Practice problems: Monopoly Monopoly (10 pts) Local symphony orchestras, such as Greensboro Symphony, can be classified as local monopolies. Below is a hypothetical demand for Greensboro symphony chamber concert tickets by local music lovers. (3 pts) Fill out the table and calculate symphony’s total revenue (TR) and marginal revenue (MR) at given ticket prices. Price 60 50 40 30 20 10 Quantity demanded 0 TR MR – a) (0.5 pt) Plot the MR curve on the graph above (plot MR along the Y axis and a corresponding quantity on the quantity axis). b) (0.5 pt) Suppose that the marginal cost (MC) of admitting one viewer (i.e., selling a ticket) is $10. Plot the MC on the graph above. c) (2 pts) Using the graph or the table above, tell the optimal number of tickets the symphony should be selling, given that the symphony wants to maximize its profit? _______ What is the profit-maximizing price of the ticket?_______ d) (2 pts) If the marginal cost (MC) also equals to the average total cost per ticket (MC=ATC) and equals to $10, what is the monopolist’s profit? Show your calculation. Shade-in the profit in the graph above.

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