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In: Economics

Assume that the market for patio chairs is a monopoly and charges each consumer the same price for patio chairs. producers have the same cost situation:

Assume that the market for patio chairs is a monopoly and charges each consumer the same price for patio chairs. producers have the same cost situation:

• The labor and raw material expense of producing additional units of patio chairs for every factory is constant at $10 and equal to average total costs. Assume this is the long run, so fixed costs are equal to zero. Per-period market demand for patio chairs is stable, and described by the data in the following equation: P = 105 – 0.025Q

b) Given market demand, marginal revenue, and cost conditions, what market quantity and price will the monopoly select in order to maximize profit?

  

Price:_________________________ Quantity:_____________________________

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Expert Solution

Rahul Sunny answered 2 years ago
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