Temple University

Economics 52

Monopoly

Name

1. The demand curve for Fibonacci Family Pizza, which has the monopoly franchise on the campus of the State University, is given by

Price

Quantity Demanded

Total Revenue

Marginal Revenue

20

0

18

2

16

4

14

6

12

8

10

Complete the total revenue and marginal revenue columns.

2. The cost function for the family business is:

Quantity

Total Cost

Marginal Cost

Average Cost

--

28

36

56

84

116

Complete the marginal cost and average cost columns.

3. How much output should the Fibonaccis produce?

4. What price should they charge?

5. What profit will they earn at that price and output?

6. On a piece of graph paper or in MS EXCEL plot the demand curve data, the marginal revenue data and the MC curve data. Use the information in the graph and a bit of interpolation to compute an approximation of the deadweight loss attributable to Finonacci's market power. DWL =