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What is the profit-maximizing level of output

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Reference no: EM132422751

Problem: Assume there is only one company in ABQ that provides sand volleyball to consumers. It faces a market demand curve P = 1,000 - 5q and has short-run total cost function C(q) = 250q

Required:

Question 1: What is the profit-maximizing level of output, price, and profits for this monopolist?

Question 2: Graph the marginal revenue, marginal cost, and demand curves. Shade in and label the area that represents profit.

Question 3: If the local government stepped into price at the socially efficient level, what would price and output be?

Question 4: What is the magnitude of the deadweight loss caused by monopoly pricing? Shade in and label the DWL from your graph

Reference no: EM132422751

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