The following graph shows demand, MR, and cost curves for a monopoly in the short run:a. Profit is maximized at a price of $ ___________.b. The profit-maximizing level of output is ___________.c. At the optimal level of output, total revenue is $ ___________, total cost is $ ___________, and profit is $ ___________.d. If the manager mistakenly sets price at $10 and sells 20 units, will profit margin (i.e., P ? ATC) be larger or smaller than when price is set at the optimal level in part c? (Average total cost is $8.75 when 20 units are produced.) Using marginal analysis, explain why this happens.

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12 11 SMC 10 ATC 9 AVC 7 4 2 D 1 10 20 30 40 50 60 70 80 90 100 110 120 Output MR Price, marginal revenue, and cost (dollars)