# Determining Optimal Output Level - Problem

Please refer attached file for graph.

A hypothetical monopoly firm is characterized by the following diagram.

a. Assuming that the above firm is a profit maximizer operating in the short run, determine its optimal price?

b. Determine the firm's profit per unit.

c. What is the ATC in dollars?

d. If the above monopolist were to behave like a perfectly competitive firm (operating in the long run), determine its price

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#### Solution Preview

Please refer attached file for graph.

Solution:

a. Assuming that the above firm is a profit maximizer operating in the short run, determine its optimal price?

A profit maximizing firm sets ...

#### Solution Summary

The solution describes the steps to calculate profit maximizing output level and corresponding price for a monopolist. It also determines the price level if the firm behaves like a perfectly competitive firm.