Your food-services company has been named as the monopoly provider of meals at a small university.The cost and demand schedules are:
TABLE 10-2
-Refer to Table 10-2,and suppose that the firm is a single-price monopolist.The level of output at which profits are zero is between

Question

Your food-services company has been named as the monopoly provider of meals at a small university.The cost and demand schedules are:
  TABLE 10-2
-Refer to Table 10-2,and suppose that the firm is a single-price monopolist.The level of output at which profits are zero is between

Quizplus · Accepted Answer

To determine the level of output at which profits are zero, we need to find the quantity where marginal revenue equals marginal cost. In this case, the marginal revenue is given by the demand schedule, which is also the average revenue since the company is a single-price monopolist. The marginal cost is given by the cost schedule.

At 200 meals, the marginal revenue is $15 per meal, and the marginal cost is $15 per meal. This means that the firm would earn zero profit at this level of output. At any lower quantity, the marginal revenue would be greater than the marginal cost, leading the firm to earn positive profit. At any higher quantity, the marginal cost would be greater than the marginal revenue, leading the firm to incur losses.

Therefore, the best choice is C) 200 and 300 meals, as this is the range where the firm earns zero profit.

Your Food-Services Company Has Been Named as the Monopoly Provider