4. Assume that a monopolist sells a product with the cost function C = F + 20Q, where C is totał cost, F is a fixed cost, and Q is the level of output. The inverse demand function is P = 60 - Q, where P is the price in the market. (i) How much profit does the firm earn when it charges the price that maximizes profit ? (ii) At what price will the firm earn zero economic profits ?

4) A monopolist faces a market inverse demand function: P = 250 – 5Q and marginal cost function: ATC = MC = 10.  Answer the following. If the monopolist employs a single price strategy, what is the optimal quantity produced and price charged. What is the market up and contribution margin from the strategy in part a if Ed = -1.0833. If other firms trying to enter this market had slightly higher cost structures, what would be a good price & quantity mix to limit entry of competition and why (no math needed). If the monopolist could create a bundled good instead of the strategy in part a, what price would it charge and how many units would be sold in the bundle. What are the profits from part a & part d? Which pricing strategy is preferred. EC: Briefly explain why a firm that offers a buy 2 get the 3rd free deal, does not just offer that same product at a 33.33% discount of the normal stated price. Need help with number 2.

6. A monopolist firm has two long-run choices: producing with short-run cost function C(q) = 30 + 5q, or exiting the market. If the inverse demand function of the market is p(g) = 15 – q, will the monopolist shut down in the short run? Will it exit the market in the long run? A. Shut down in the short run; exit in the long run B. Shut down in the short run; not exit in the long run C. Not shut down in the short run; exit in the long run D. Not shut down in the short run; not exit in the long run

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