AmonoPoly is Charar tekized the average Cost Ac- 0/44 and the marginal COst MC = 0/2 Where 0 IT the 9uantitY Produced, the demand for the monoPoLY good 7s Cl= 10-P. Wheve P Ts Price the Pair of Oltimal uanETEY and Prce of the Profit MaximizLng meso Poly Is %3D

$/q 16 14 12 10 OB642 8 0 1250 500 250 MC 750 ATC In the above figure, the monopolistic competitor's profit-maximizing total cost is D MR 50 100 150 200 250 g/t

Question 1 Figure Proft Maximization Decision of a Monopolist in the figure, the cost per unit for this monopoly firm is: A $15. B) $10. C) $11. D $6.

Many schemes for price discrimination involvesome cost. For example, discount coupons take upthe time and resources of both the buyer and theseller. This question considers the implications ofcostly price discrimination. To keep things simple,let’s assume that our monopolist’s production costsare simply proportional to output so that averagetotal cost and marginal cost are constant and equalto each other.a. Draw the cost, demand, and marginal-revenuecurves for the monopolist. Show the pricethe monopolist would charge without pricediscrimination.b. In your diagram, mark the area equal to themonopolist’s profit and call it X. Mark thearea equal to consumer surplus and call it Y.Mark the area equal to the deadweight loss andcall it Z.c. Now suppose that the monopolist can perfectlyprice discriminate. What is the monopolist’sprofit? (Give your answer in terms of X, Y,and Z.)d. What is the change in the monopolist’s profit fromprice discrimination? What is the change in totalsurplus from…