Final answer:
The optimal quantity, price, and profit level for a single-price monopoly can be determined using a three-step process of maximizing profit, choosing the price, and calculating the profit.
Step-by-step explanation:
The optimal q* (quantity), p* (price), and profit level for a single-price monopoly can be determined using a three-step process. First, the monopoly selects the quantity that maximizes its profit by choosing where marginal revenue (MR) equals marginal cost (MC). Second, the monopoly determines the price it will charge for the chosen quantity by drawing a line up from the quantity to its perceived demand curve. Finally, the monopoly calculates its profit by multiplying the chosen quantity by the price and subtracting the total cost, which is the chosen quantity multiplied by the average cost.