Question

A pure monopolist sells output for $4.00 per unit at the current level of production. At this level of output, the marginal cost is $3.00, average variable costs are $3.75, and average total costs are $4.25. The marginal revenue is $3.00. What is the short-run and long-run condition for the monopolist and what output changes would you recommend?

Answer 1

A pure monopolist sells output for $4.00 per unit at the current level of production.
At this level of output, the marginal cost is $3.00, average variable costs are $3.75,
and average total costs are $4.25. The marginal revenue is $3.00. What is the short-
run condition for the monopolist and what output changes would you recommend?