Question

Each question is worth 20 points. It has a total of 60 points. 1. You are the Chief executive officer of AT&Time-Warner. You live in a world where you are the only phone/content provider. You are therefore a monopoly. Using the information below, determine what price you will charge for your bundled phone-and cable service and what quantity you will produce. Because you are accountable to your shareholders, you must maximize profits. a. Complete the spaces in the table below Quantity Price (Consumers are willing to pay) ($ per unit) Total Revenue ($) Total cost Profit ($) ($) Marginal Marginal revenue ($ cost per unit) ($ per unit) 0 200 145 1 180 175 2 160 200 3 140 220 4 120 250 5 100 300 6 80 370 7 60 460 8 40 570 b. Now graph demand curve, marginal cost curve and marginal revenue curve on a graph. Please be careful about your units. c. What is the price you are going to charge? Show on the graph the price and quantity produced. d. Show on your graph, where the perfect competitor would produce at the market price.

          Each question is worth 20 points. It has a total of 60 points.
1. You are the Chief executive officer of AT&Time-Warner. You live in a world where you are
the only phone/content provider. You are therefore a monopoly. Using the information below,
determine what price you will charge for your bundled phone-and cable service and what
quantity you will produce. Because you are accountable to your shareholders, you must
maximize profits.
a. Complete the spaces in the table below
Quantity Price
(Consumers are
willing to pay)
($ per unit)
Total
Revenue
($)
Total cost Profit
($)
($)
Marginal Marginal
revenue ($ cost
per unit) ($ per unit)
0
200
145
1
180
175
2
160
200
3
140
220
4
120
250
5
100
300
6
80
370
7
60
460
8
40
570
b. Now graph demand curve, marginal cost curve and marginal revenue curve on a graph. Please
be careful about your units.
c. What is the price you are going to charge? Show on the graph the price and quantity produced.
d. Show on your graph, where the perfect competitor would produce at the market price.

Each question is worth 20 points. It has a total of 60 points.
1. You are the Chief executive officer of AT Time-Warner. You live in a world where you are
the only phone/content provider. You are therefore a monopoly. Using the information below,
determine what price you will charge for your bundled phone-and cable service and what
quantity you will produce. Because you are accountable to your shareholders, you must
maximize profits.
a. Complete the spaces in the table below
Quantity Price
(Consumers are
willing to pay)
(per unit)
Total
Revenue
()
Total cost Profit
()
()
Marginal Marginal
revenue (cost
per unit) ( per unit)
0
200
145
1
180
175
2
160
200
3
140
220
4
120
250
5
100
300
6
80
370
7
60
460
8
40
570
b. Now graph demand curve, marginal cost curve and marginal revenue curve on a graph. Please
be careful about your units.
c. What is the price you are going to charge? Show on the graph the price and quantity produced.
d. Show on your graph, where the perfect competitor would produce at the market price.

Added by Maureen D.

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