Calculate output, price at profit-maximizing activity level

Reference no: EM1370015

Paradox Dental, Limited., enjoys a local monopoly in provision of oral examination services in Tuskegee, Alabama. Total and marginal revenue relations for standard procedure are:

TR = $250Q - $0.001Q2
MR = dTR/dQ = $250 - $0.002Q
Marginal costs (and average variable costs for the process are stable at $150 per unit.
Fixed costs are zero.

A. As a monopoly, calculate Paradox Dental's output, price, and profits at the profit-maximizing activity level.
B. What price and profit levels would prevail based on the assumption that new entry into the local market results in competitive market pricing?

Reference no: EM1370015

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