K Demand: P=10-Q Marginal Revenue: MR = 10 - 20 Total Cost: TC = 3+Q+0.5Q² Marginal Cost: MC = 1 + Q The above equations describe the monopolist's demand, marginal revenue, total cost, and the marginal cost. What is the monopolist's profit? O $10.5 $7.5 $15 $8

Serena is profit-maximizing monopolist selling of her own patented perfume, whose demand and marginal cost curves are as shown. 1. Serena is profit-maximizing monopolist selling of her own patented perfume, whose demand and marginal cost curves are as shown. Relative to the consumer surplus that would result at the perfectly competitive quantity and price, how much consumer surplus is lost from her selling at the monopolist's profit-maximizing quantity and price? $ per ounce 60 50 45 40 30 20 15 10 0 468 12 16 Ounces/day MC D 24 2. In the first problem, how much total surplus would Serena have made if she acted as a perfectly price-discriminating monopolist? Show your work. 3. Explain the difference between the demand curve faced by a perfectly competitive firm and the demand curve faced by a monopoly. Draw both curves and explain why they are different. How do these demand curves cause marginal revenue to differ across the two types of firm? 4. Explain the incentives created by…

5. Use the following figure to answer the question: If the monopolist charges the same price to all consumers, what will be the deadweight loss at the monopolist’s profit maximizing level of output?

Ruth’s Rubies is a single-price monopolist in the market for rubies. Suppose Ruth’s Rubies currently charges $200 for its rubies (i.e. sells 3 rubies). If it lowers the price to $100 (to sell 4 rubies), how large is:           The quantity effect? The price effect?       Price of a Ruby Quantity of Rubies           Demanded Total Revenue Marginal Revenue    $500      0      0        400      1      400      400      300      2      600      200      200      3       600      0      100      4     400     200          0      5       0    400