Calculating optimal output level
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Use the attached graph to answer the following questions
a) what is the monopolist's profit-maximizing output?
b)At the profit-maximizing output rate, what are the monopolist's average total cost and average revenue?
c) At the profit-maximizing output rate, what are the monopolist's total cost and total revenue?
d) What is the maximum profit?
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Solution Summary
Solution describes the steps to calculate optimal output level, ATC, AR, total cost, total revenue and associated profit.
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a) What is the monopolist's profit-maximizing output?
A monopolist sets its output level such that MR=MC to maximize profits. Refer to the graph and check for the point where MR and MC curves intersect each other. We find that MR and MC curves intersect each other ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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