total cost is $ c. At the optimal level of output, total revenue is $ and profit is d. If the manager mistakenly sets price at $10 and sells 20 units, will profit margin (ie, P-ATC) be larger or smaller than when price is set at the optimal level in part c? (Note: Average total cost is $8.75 when 20 units are produced.) Using marginal anal- ysis, explain why this happens
total cost is $ c. At the optimal level of output, total revenue is $ and profit is d. If the manager mistakenly sets price at $10 and sells 20 units, will profit margin (ie, P-ATC) be larger or smaller than when price is set at the optimal level in part c? (Note: Average total cost is $8.75 when 20 units are produced.) Using marginal anal- ysis, explain why this happens
Chapter13: Monopoly And Antitrust
Section: Chapter Questions
Problem 7P
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