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    Equilibrium Price and Output Calculation

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    Suppose p = 20 - 2q and MR=20-4q is the market demand function for a local monopoly. the marginal cost is 2 q. the local monopoly tries to maximize its profits by equating mc = mr and charging a uniform price. what will be the equilibrium price and output? A) $6.33, 3.33 units; b) $6.33, 5 units; c) $13.33, 3.33 units; d) $10, 5 units.

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    Solution Preview

    Answer: c) $13.33, 3.33 units


    It is given that,
    MR = 20 - 4Q
    MC = 2Q
    For ...

    Solution Summary

    This solution contains step-by-step calculations to determine variable number of units at different equilibrium prices.