Check Your Understanding

1. Question

   Use the accompanying total revenue schedule of Emerald, Inc., a monopoly producer of 10-carat emeralds, to calculate the items listed in parts a–d. Then answer part e.

   Quantity of emeralds demanded	Total revenue
   1	$100
   2	186
   3	252
   4	280
   5	250

   1. the demand schedule (Hint: the average revenue at each quantity indicates the price at which that quantity would be demanded.)

   2. the marginal revenue schedule

   3. the quantity effect component of marginal revenue at each output level

   4. the price effect component of marginal revenue at each output level

   5. What additional information is needed to determine Emerald, Inc.’s profit-maximizing output?

2. Question

   Replicate Figure 61.3 and use your graph to show what happens to the following when the marginal cost of diamond production rises from $200 to $400. Use the information in Table 61.1 to identify specific numbers for prices and quantities on your graph.

   1. the marginal cost curve

   2. the profit-maximizing price and quantity

   3. the profit of the monopolist

   4. the quantity that would be produced if the diamond industry were perfectly competitive, and the associated profit