Changes

Question 6 does not mention Anthony.  Did you mean this question 8?

Question 6 does not mention Anthony.  Did you mean this question 8?

8. Suppose Anthony owns a company having marginal costs of $5 for all his units. If he sells only one, then he reaps $11; selling two fetches a price of $10 piece; selling 3 attains a price of $9; selling four reaps $8; Q=5 would have P=$7; Q=6 has P=$6, etc. A competitive firm would have the same cost and demand numbers. What does Anthony sell at, and what is the social cost of his monopoly?

<br>Question 8. Suppose Anthony owns a company having marginal costs of $5 for all his units. If he sells only one, then he reaps $11; selling two fetches a price of $10 piece; selling 3 attains a price of $9; selling four reaps $8; Q=5 would have P=$7; Q=6 has P=$6, etc. A competitive firm would have the same cost and demand numbers. What does Anthony sell at, and what is the social cost of his monopoly?

Anthony would pick the output level that maximizes his profits.  Perhaps you've done that.  Now the harder question concerns the social cost of his monopoly.  What would the price and output be in a competitive market?  Perhaps some extrapolation is required on the curve.  I did say "etc."  Hope that helps.--[[User:Aschlafly|Aschlafly]] 20:14, 7 April 2007 (EDT)

Anthony would pick the output level that maximizes his profits.  Perhaps you've done that.  Now the harder question concerns the social cost of his monopoly.  What would the price and output be in a competitive market?  Perhaps some extrapolation is required on the curve.  I did say "etc."  Hope that helps.--[[User:Aschlafly|Aschlafly]] 20:14, 7 April 2007 (EDT)