Estimate the average cost, marginal cost, profits and graph the equilibrium.
Given the subsequent production information of a monopolistic company:
Output level = 100 units
Average variable cost = $10/unit
Total fixed cost = $400
The company is producing at the minimum point of its average cost curve
a) At this output level compute the average cost and the marginal cost.
b) Draw a diagram showing the current situation of the company.
c) In addition to the above information, suppose the price of the output is $13/unit, if the company wants to maximize its profit, illustrate what should it do? Explain in detail with the aid of a diagram.
d) Suppose the price of the output is $16/unit instead, if the company wants to maximize its profit, illustrate what should it do? Explain in detail with the aid of a diagram.