Finding optimal output level
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Answer the next question on the basis of the following information for a firm operating in an imperfectly competitive market:
Output------------Price------------Total Cost
----0--------------$500---------------$250
----1--------------$300---------------$260
----2--------------$250---------------$290
----3--------------$200---------------$350
----4--------------$150---------------$480
----5--------------$100---------------$700
How many units would the above profit-maximizing monopolist produce? Explain
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Solution Summary
Solution describes the steps to find optimal output level and associated profit.
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Please refer attached file for better clarity of table.
Solution:
Output Q Price, P Total Revenue Total Cost Marginal Revenue Marginal Cost Profit
TR=P*Q TC MR* MC** TR-TC
0 500 0 250 -250
1 300 ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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