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    Profit maximizing output level

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    Please refer attached file for diagram.

    The accompanying diagram shows the demand, marginal revenue and marginal cost of a monopolist.

    a.Determine the profit maximizing output and price.
    b. What output and price would prevail if the product was sold by price taking firms in a perfectly competitive market?
    c. Calculate the dead weight loss of this monopoly.

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    https://brainmass.com/economics/output-and-costs/profit-maximizing-output-level-291224

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    Solution Preview

    Please refer attached file for diagram.

    Solution:

    a.Determine the profit maximizing output and price.
    A monopolist sets its output level such that MR=MC.
    MR and MC curve intersect at Q=3. ...

    Solution Summary

    Solution depicts the steps to determine profit maximizing output and price level for a monopolist as well as for a perfectly competitive firm. It also calculates the deadweight loss of the monopoly.

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