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Consider a market with an inverse demand function that is linear: P = 46 - 2Q. The cost at the wholesale level is 0 for each unit produced. At the retail level, there is a cost of $6 associated with retailing each unit purchased at wholesale. Thus, the average cost for both levels combined is also $6. Find the optimal output and retail price for a vertically integrated monopolist, either using a graph or calculus. Illustrate answer with graph.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M962754

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