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Monopoly and Perfect Competition

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Please refer attached file for diagram.

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

(Please explain the reason behind your answer for each question above.)

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Solution Summary

Solution describes the steps to determine optimal price, profit, ATC. It also determines its price if firm operates in perfectly competitive environment.

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Please refer attached file for diagram.

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 its output such that ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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