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.

 

1. Is the firm's profit-maximizing output level? In no more than three sentences, explain why profit is maximum at this output level.
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3. At what (single) price does the firm sell its products to maximize profit?
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5. How much profit can the firm earn at the profit-maximizing output level?
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7. If the firm uses first-degree price discrimination, determine the firm's output level, total revenue, total cost, and profit.
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9. In no more than three sentences, explain what first-degree discrimination means.

Transcribed Image Text:

156 100.5 45 MR 277.5 390 780 MC=AC D Q 156 100.5 45 MR 277.5 390 780 MC=AC D Q

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The firms profitmaximizing output level is 390 units This is where marginal ... View the full answer