Use Figure 13-6 to show what happens to the following when the marginal cost of diamond production
Question:
Use Figure 13-6 to show what happens to the following when the marginal cost of diamond production rises from $200 to $400.
Marginal cost curve Profit-maximizing price and quantity Profit of the monopolist Perfectly competitive industry profits
Figure 13-6:
Transcribed Image Text:
Price, cost, marginal revenue of diamond $1,000 PM - 600 Monopoly profit Pc-200 B Monopolist's optimal point Perfectly competitive industry's optimal point A: 0 -200 -400 8 10 10 MR MC = ATC D 16 20 Qc Quantity of diamonds
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As the accompanying diagram shows the marginal cost curve shifts upward to 400 The ...View the full answer
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