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Calculating profit-maximizing output and price level

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Please refer attached file for diagram.

The follwing diagram shows the cost structure of a mononpoly firm as well as market demand. Identify on the graph and calculate the following:
a. Profit-maximizing output level
b. Profit-maximizing price
c. Total Revenue
d. Total Cost
e. Total profit or loss.

State the correct formula and show calculations.

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Solution Summary

Solution describes the steps and formulas for calculating profit-maximizing output and price level for a monopolist. It also calculates corresponding total cost, total revenue and profit/loss.

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Please refer attached file for graph.


A monopolist sets its output such that MR=MC to maximize its profits.
Let us look at the point MR and MC curves intersects each other. We find that MR and MC ...

Solution provided by:
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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