Question
A monopolist has a flat marginal and average cost of production( i.e. every additional unit has the same cost per unit MC=AC). The market demand
A monopolist has a flat marginal and average cost of production( i.e. every additional unit has the same cost per unit MC=AC). The market demand is P=A-B*Q where A and B are positive constants, P is the price and Q is the quantity demanded. Am innovation reduces the cost of production by $4 per unit. Use the graph to show the profit maximizing monopolist's choice and the changes due to the innovations. How much will profit per unit (profit margin) change as the result of the innovation? Give the number and explain how you got it. (Graph is not given)
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