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# Profit Maximizing Activity Level

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Paradox Dental, Ltd., enjoys a local monopoly in the provision of oral examination services in Tuskegee, Alabama. Total and marginal revenue relations for the standard procedure are:

TR = \$250Q - \$0.001Q2
MR = dTR/dQ = \$250 - \$0.002Q
Marginal costs (and average variable costs for the process are stable at \$150 per unit.
Fixed costs are zero.

A. As a monopoly, calculate Paradox Dental's output, price, and profits at the profit-maximizing activity level.
B. What price and profit levels would prevail based on the assumption that new entry into the local market results in competitive market pricing?

https://brainmass.com/economics/price-levels/profit-maximizing-activity-level-503145

#### Solution Preview

A. Given that,
TR = \$250Q-\$0.001Q^2
MR = dTR/dQ = \$250-\$0.002Q
Marginal Cost, MC = \$150

As we know that, a monopoly can maximize it ...

#### Solution Summary

This solution is comprised of a detailed step-by-step explanation of how to calculate output, price and profits at the profit-maximizing level. These concepts are analyzed within the scenario of Paradox Dental, Ltd., which enjoys a monopoly in Tuskegee, Alabama.

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