A monopolist has determined that marginal revenue is $2.00 and the average cost is $1.75. It has also determined that the lowest sustainable average cost is $1.75. To maximize profit, should the firm lower its price, increase its price, or leave the price unchanged? How would you change your response if marginal revenue is $1.50? Explain your responses

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Answer Decision on Pricing Strategy Current Situation Marginal Revenue MR 200 Average Cost AC 175 Goal Maximize profit Analysis A monopolist maximizes ... View the full answer