Question

a. A pure monopolist sells output for $4.00 per unit at the current level of production. At this level of output, the marginal cost is $3.00, average variable costs are $3.75, and average total costs are $4.25. The marginal revenue is $3.00. What is the short-run condition for the monopolist and what output changes would you recommend?
b. Why is marginal revenue, for a monopoly, less than price for every level of output except the first?
c. How does price elasticity affect the price-quantity combination and segment of the demand curve that the monopolist would prefer for price and output?



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  • CreatedAugust 26, 2013
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