78 452
Assignments Done
99,6%
Successfully Done
In September 2019

# Answer to Question #49400 in Microeconomics for susie

Question #49400
Suppose that a monopolist is producing a level of output such that AVC = \$6, AFC = \$4, P = \$8, MR = \$10, and MC = \$6. Based on this information, the firm is realizing: a loss which could be reduced by reducing price and increasing output a profit which could be increased by reducing price and increasing output a loss which could be reduced by increasing price and reducing output a profit which could be increased by increasing price and reducing output
If a monopolist is producing a level of output such that AVC = \$6, AFC = \$4, P = \$8, MR = \$10, and MC = \$6, then its total profit is:
TP = (P - ATC)*Q, and as ATC = AVC + AFC = 6 + 4 = \$10 &gt; P = \$8, so the firm faces losses, and as MR &gt; MC (10 &gt; 6), then a monopolist should decrease price increasing the output.
So, based on this information, the firm is realizing:
a) a loss which could be reduced by reducing price and increasing output

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!