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Marginal revenue is the incremental gain produced by selling an additional unit. It follows the law of diminishing returns, eroding as output levels increase.
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The following table shows the demand curve facing a monopolist who produces at a constant marginal cost of 10: a. Calculate the firm's marginal revenue curve. b. What are the firm's profit-maximizing output and price? What is its profit? c. What would the equilibrium price and quantity be in a competitive industry? d. What would the social gain be if this monopolist were forced to produce and price at the competitive equilibrium? Who would gain and lose as a result? | Numerade
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