A monopolist can produce at constant average and marginal costs of AC = MC = 5. The firm faces a market demand curve given by Q = 53 - P. The monopolist’s marginal revenue curve is given by MR = 53 – 2Q a. Calculate the profit-maximizing price-quantity combination for the monopolist. Also calculate the monopolist’s profits and consumer surplus. b. What output level would be produced by this industry under perfect competition (where price = marginal cost) ? c. Calculate the consumer surplus obtained by consumers in part b. Show that this exceeds the sum of the monopolist’s profits and consumer surplus received in part a. What is the value of the “deadweight loss” from monopolization?
A monopolist can produce at constant average and marginal costs of AC = MC = 5. The firm faces a market demand curve given by Q = 53 - P. The monopolist’s marginal revenue curve is given by MR = 53 – 2Q a. Calculate the profit-maximizing price-quantity combination for the monopolist. Also calculate the monopolist’s profits and consumer surplus. b. What output level would be produced by this industry under perfect competition (where price = marginal cost) ? c. Calculate the consumer surplus obtained by consumers in part b. Show that this exceeds the sum of the monopolist’s profits and consumer surplus received in part a. What is the value of the “deadweight loss” from monopolization?
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter9: Monopoly
Section: Chapter Questions
Problem 6SQ
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A monopolist can produce at constant average and marginal costs of AC = MC = 5.
The firm faces a market demand curve given by Q = 53 - P. The monopolist’s marginal revenue curve is given by MR = 53 – 2Q
a. Calculate the profit-maximizing price-quantity combination for the monopolist. Also calculate the monopolist’s profits and
b. What output level would be produced by this industry under
(where price = marginal cost) ?
c. Calculate the consumer surplus obtained by consumers in part b. Show that this exceeds the sum of the monopolist’s profits and consumer surplus received in part a. What is the value of the “
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