The demand curve and marginal revenue curve for a firm's products are given as: P = 156
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Question:
The demand curve and marginal revenue curve for a firm's products are given as: P = 156 - 0.2Q and MR = 156 - 0.4Q. The firm's marginal cost and average total cost of production are constant at 45/unit. The graph of the demand curve, marginal revenue, marginal cost, and average total cost of production are shown below.
- Is the firm's profit-maximizing output level? In no more than three sentences, explain why profit is maximum at this output level.
- At what (single) price does the firm sell its products to maximize profit?
- How much profit can the firm earn at the profit-maximizing output level?
- If the firm uses first-degree price discrimination, determine the firm's output level, total revenue, total cost, and profit.
- In no more than three sentences, explain what first-degree discrimination means.
Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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