What are its profit-maximizing price and quantity

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Reference no: EM131103863

A monopolist faces the following demand curve:

Q = 144/P2

where Q is the quantity demanded and P is price. Its
average variable cost is

AVC = Q1:

2
and its fixed cost is 5.

a. What are its profit-maximizing price and quantity? What is the resulting profit?

b. Suppose the government regulates the price to be no greater than $4 per unit. How much will the monopolist produce? What will its profit be?

c. Suppose the government wants to set a ceiling price that induces the monopolist to produce the largest possible output. What price will accomplish this goal?

Reference no: EM131103863

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