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Aa

Single Market Monopolist

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Payoff Computation

Suppose the monopolist has a cost of $2 per unit. The monopolist sets quantity to be 7 units. Given the market demand curve: P = 20 - 2Q that means the market price will be P=20 - 2(7)=6. So the monopolist profit is:

Profit = 7 x ($6 - $2) = $28

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