Analyzing profit maximization level of a monopolist.
A pure monopolist determines that at the current level of output the marginal cost of production is $2.00, average variable costs are $2.75, and average total costs are $2.95. The marginal revenue is $2.75. Illustrate what would you recommend which the monopolist should do to maximize profits? Draw a graph showing hte above situation. Include in that graph, the monopolist's cost curves, demand and marginal revenue curves and the price and quantities that are indicated by the situation described above.