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Suppose a monopolist faces the demand curve given by P = 100 - 2Q. The total curve is given by: TC = 100 + 40Q.
Suppose a monopolist faces the demand curve given by P = 100 - 2Q. The total curve is given by: TC = 100 + 40Q. Assume the firm can only charge one price for all consumers.
a. Derive the equations for MR, MC, and ATC. (1.5 points)
b. Accurately graph your answers in (a) along with the demand curve. (1.5 points)
c. What is the profit-maximizing price and level of output? (1 point)
d. What the price elasticity of demand at the profit-maximizing price? (1 point)
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