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A firm is producing 100 units of its product. At this level of output the AVC=$60, and the ATC=$80. The firm is a price taker and the price for its product is $100. Assuming that the firm is maximizing profits and that labor is the only variable input. From this information:
Be sure to show your work.
Suppose a monopolist faces a demand curve given by P = 25 - 1/2 Q and total cost curve given by TC = 100 + 10Q. First, use this information to derive equations for marginal revenue, marginal cost, and average total cost. Then graph these equations, along with the demand curve. Find the profit-maximizing price and output. What is the level of profit or loss for the firm at this price?
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Structure and Content: The paper should include the following components, organized in a logical flow and written as cohesive paragraphs:
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