Suppose Alex\'s Melodica shoppe is a non-price discriminating monopolist and is

Question

Suppose Alex's Melodica shoppe is a non-price discriminating monopolist and is producing his profit-maximizing level of output. Suppose further that at his current level of output, Alex's average total cost is $300, his average fixed cost is $250, and his marginal revenue is $200. It can be concluded with certainty that the price of a melodica is ______ in the short run. **most important-- please include how you find the answer---

a) greater than or equal to 300

b) greater than 200

c)greater than 250

D)equal to 200

e)greater than or equal to 200

--What about for Long run?

Explanation / Answer

ATC=300 $

AFC=250 $

Marginal revenue(MR)=200$

Short run profits are maximized if MR=MC=200 $

Monopolist always charge price greater than MC which is 200 $

So correct option is b for short run

Long run condtion:MR=long run MC

and price will greater or equal to Average total cost

P is greater than equal to 300,so a is correct option for long run.

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