Suppose that the demand is given by P(Q) = 4 - Q and that the total cost is C = 2Q. a) Find the monopolist optimal price and quantity. b) Calculate consumers' surplus and the monopolist's profit. c) Suppose the market is perfectly competitive. What are the equilibrium price anc quantity?

Suppose that the demand is given by P(Q) = 4 - Q and that the total cost is C = 2Q. a) Find the monopolist optimal price and quantity. b) Calculate consumers' surplus and the monopolist's profit. c) Suppose the market is perfectly competitive. What are the equilibrium price anc quantity?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 32CTQ: Your company operates in a perfectly competitive market. You have been told that advertising can...

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Question

Part D E

d) Calculate the consumers' surplus and profit under perfect competition.
e) Calculate the total surplus under monopoly and under perfect competition. Calculate
the dead weight loss.

Suppose that the demand is given by P(Q) = 4 - Q and that the total cost is C = 2Q.
a) Find the monopolist optimal price and quantity.
b) Calculate consumers' surplus and the monopolist's profit.
c) Suppose the market is perfectly competitive. What are the equilibrium price and
quantity?

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