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Unformatted text preview: output a. stays the same. b. increases. c. decreases. __C_ 5. Marginal revenue for a monopolist is computed as a. average revenue divided by quantity sold. b. total revenue divided by quantity sold. c. change in total revenue per one unit increase in quantity sold. Short Answer ( 10 points ) 1. Explain how a profit-maximizing monopolist chooses its level of output and the price of its goods. Show this with a graph. A profit-maximizing monopolist chooses the output level where MR = MC and then chooses the corresponding price on the market demand curve. This is the same as in the Aplia problem we reviewed in class, though in this case you were not asked to show ATC or profit:...
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- Spring '07