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Economics

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A PURE MONOPOLIST SELLS OUTPUT FOR $4 PER UNIT. THE MARGINAL COST IS $3, AVERAGE VARIABLE COSTS ARE $3.75, AND AVERAGE TOTAL COSTS ARE $4.25. THE MARGINAL RVENUE IS $3. WHAT IS THE SHORT RUN CONDITION FOR THE MONOPOLIST AND WHAT OUTPUT CHANGES WOULD YOU RECCOMMEND IN THE LONGER RUN?

  • Economics -

    Thank you for using the Jiskha Homework Help Forum, but PLEASE use lower-cap letters. Capital letters are so much more difficult to read that some volunteers won't even try to read them and in computer language, it is considered rude to use caps.

    Sra

  • Economics -

    As MC=MR, the monopolist is at its optimal position in the short run. However, as average total cost are above $4, the firm is losing money. So, long run, either the firm shuts down, or figures out a way to cut costs.

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