Answer the question on the basis of the following information for a pure monopolist: $\begin{array}{ccc}
\begin{array}{ccc}
\
\text { Output } & & \text { Total Cost } \
\hline
0 & & \$ 250 \
1 & & 260 \
2 & & 290 \
3 & & 350 \
4 & & 480 \
5 & & 700
\end{array}
\begin{array}{l}
\text { Product }\
\begin{array}{c}
\text { Price } \
\hline \$ 500 \
300 \
250 \
200 \
150 \
100
\end{array}
\end{array}
\end{array}$ At its profit-maximizing output,the given nondiscriminating monopolist:

Question

Quizplus · Accepted Answer

To find the profit-maximizing output, we calculate marginal cost (MC) and marginal revenue (MR) and compare them. The output level where MR = MC gives us the profit-maximizing quantity. Then, we calculate total revenue (TR) and total cost (TC) at this quantity to find profit.1. Calculate Marginal Cost (MC) for each additional unit:- MC for 1st unit = $260 - $250 = $10- MC for 2nd unit = $290 - $260 = $30- MC for 3rd unit = $350 - $290 = $60- MC for 4th unit = $480 - $350 = $130- MC for 5th unit = $700 - $480 = $2202. Calculate Marginal Revenue (MR) for each additional unit:- MR for 1st unit = $500 - $0 = $500- MR for 2nd unit = ($300 * 2) - $500 = $100- MR for 3rd unit = ($250 * 3) - ($300 * 2) = $150- MR for 4th unit = ($200 * 4) - ($250 * 3) = $50- MR for 5th unit = ($100 * 5) - ($200 * 4) = -$300The profit-maximizing output is where MR is just about to fall below MC, which happens after the 3rd unit (since MR for the 4th unit is $50 and MC is $130).3. Calculate Total Revenue (TR) and Total Cost (TC) at 3 units:- TR = $250 * 3 = $750- TC = $3504. Calculate Profit:- Profit = TR - TC = $750 - $350 = $400However, there seems to be a mistake in my calculations as none of the options match the calculated profit. Given the options, let's reassess the approach:The correct approach involves looking at the profit for each output level and determining which gives the highest profit:- Profit at 0 units = $0 - $250 = -$250 (loss)- Profit at 1 unit = $500 - $260 = $240- Profit at 2 units = ($300 * 2) - $290 = $310- Profit at 3 units = ($250 * 3) - $350 = $400- Profit at 4 units = ($200 * 4) - $480 = $320- Profit at 5 units = ($100 * 5) - $700 = -$200 (loss)The highest profit is at 3 units, which is $400, not $250 as stated in the options. Given the options provided and the mistake in the initial calculation, the correct answer based on the options should be recalculated based on the correct interpretation of economic profit or normal profit. However, without the correct profit calculation aligning with the options, it's challenging to select the right answer based on the provided calculations. Given the misunderstanding in the calculation process, let's correct the approach based on the options provided:The profit-maximizing level is where MR = MC, and we calculate profit as TR - TC. Without the exact match in the calculations to the options and acknowledging a mistake in the process, the correct answer based on the provided information and typical economic analysis should reflect the profit at the optimal output level, but there seems to be a discrepancy in the calculation process.

Answer the Question on the Basis of the Following Information