3. Assume that you are an economic consultant. The firm that hired you has provided the information below. The firm is a price searcher and wants to maximize its profit (or minimize its loss). Information Price: $4 Elasticity of demand at price of $4 is Ed=-1 Quantity of output: 2000 Total variable cost: 4000 Average fixed cost: 1 Marginal cost is constant and equal to the average variable cost: MC=AVC=2.

3. Assume that you are an economic consultant. The firm that hired you has provided the information below. The firm is a price searcher and wants to maximize its profit (or minimize its loss). Information Price: $4 Elasticity of demand at price of $4 is Ed=-1 Quantity of output: 2000 Total variable cost: 4000 Average fixed cost: 1 Marginal cost is constant and equal to the average variable cost: MC=AVC=2.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Monopoly

Section: Chapter Questions

Problem 4PA

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