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    The Marginal Revenue Curve: What is the monopoly's profit-maximizing output level?

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    The marginal revenue curve of a monopoly crosses its marginal cost curve at $30 per unit, and an output of 2 million units. The price that consumers are willing and able to pay for this output is $40 per unit. If it produces this output, the firm's average total cost is $43 per unit, and its average fixed cost is $8 per unit.

    a) What is this producer's profit-maximizing (loss-minimizing) output level?
    b) What are the firm's economic profits (or economic losses)?

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    Solution Preview

    For any firm (regardless whether is it a monopoly or competitor), the profit max. condition is always marginal ...

    Solution Summary

    This solution briefly explains how to find profit maximizing level of output and economic profit (losses) at the given output.