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    sheenbean8's Avatar
    sheenbean8 Posts: 12, Reputation: 1
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    #1

    Oct 13, 2012, 12:03 PM
    Help with maximizing profit
    Hello, Can anyone give me a start on this? I have no clue.

    A monopolist has determined that marginal revenue is $2.00 and average cost is $1.75. It has also determined that the lowest sustainable average cost is $1.75. To maximize profit, should the firm lower its price, increase its price, or leave the price unchanged? How would you change your response if marginal revenue is $1.50? Explain your responses.
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    Oct 14, 2012, 05:13 AM
    I'd lower the price but I really want to know about the elasticity of demand otherwise I might be throwing away profit for nothing
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