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handout-6

# handout-6 - level of output If so what is her profit Draw...

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Handout 6: Pure Monopoly Heidi's Mineral Springs, a pure monopoly, has the following demand schedule and total cost for bottled mineral water: Quantity (in bottles) Price Total Cost 0 \$10 \$ 1 1 8 3 2 6 7 3 4 13 4 2 21 5 0 31 a) Calculate Heidi's total revenue and marginal revenue schedules. b) How many bottles of mineral water will Heidi sell? At what price? Will she earn an economic profit at this
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Unformatted text preview: level of output? If so, what is her profit? Draw graphs using the total as well as marginal approaches to confirm your answer. c) If the fixed costs increased by \$5, how would this affect Heidi's output decision? Explain carefully. If the fixed costs increased by \$10, how would this affect Heidi's output decision? Explain....
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