Currently, a monopolist's profit-maximizing output is 200...

Currently, a monopolist's profit-maximizing output is 200 units per week. It sells its output at a price of $$\$ 60$$ per unit and collects $$\$ 30$$ per unit in revenues from the sale of the last unit produced each week. The firm's total costs each week are $$\$ 9,000$$. Given this information, what are the firm's maximized weekly economic profits and its marginal cost?

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Key Concepts

Profit Maximization

Profit maximization is a key objective where firms aim to produce the quantity of output that yields the greatest difference between total revenue and total cost. In the context of a monopolist, this is achieved by choosing the output level where marginal revenue equals marginal cost.

Marginal Revenue and Marginal Cost Equilibrium

Marginal revenue (MR) is the additional revenue gained from selling one more unit of output, while marginal cost (MC) is the extra cost incurred from producing that unit. For a monopolist, the profit-maximizing condition is to set MR equal to MC, ensuring that producing additional units does not reduce overall profit.

Economic Profit

Economic profit is defined as total revenue minus total cost, including both explicit and implicit costs. This measure indicates the firm’s overall profitability and efficiency in resource allocation, showing whether the firm is covering all costs and generating surplus.

Revenue and Cost Analysis

Analyzing revenue and cost functions involves calculating total revenue by multiplying the price per unit by the quantity sold, and then subtracting the total costs to determine profit. This analysis is fundamental in assessing business performance and making informed production decisions.

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