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The graph below depicts a firm with market power. In the graph, MC represents the firm's marginal costs, ATC represents the average total costs, D
The graph below depicts a firm with market power. In the graph, MC represents the firm's marginal costs, ATC represents the average total costs, D represents demand, and MR represents marginal revenue.
- At 50 units of output, how much would this profit-maximizing monopolist charge?
- How many units will it produce to maximize total profit?
- What would be the socially optimal output price as set by market demand?
- Calculate the firm's total revenue at the profit-maximizing price and output.
- If government regulation required that this firm produce 60 units, would it still earn profit? Explain.
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