Price 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 01 6 N 8 3 The accompanying graph depicts the demand and marginal revenue (MR) curves in a market | served by a monopolist. The monopolist faces a constant marginal cost of $4. MR Demand 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Quantity What quantity will the monopolist produce to maximize its profits? Question 14 options: 12

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…

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2. Consider the market and cost structure represented in the diagram. a) Does the firm have market power? How do you know? b) What would be the amount of output supplied if the market were being served by a monopolist? c) What would be the price? d) Calculate the amount of consumer surplus. P 90 80 70 60 50 40 30 20 MC 10 Isoprofit 1 2 3 4 5 6 7 8 9 Q

Q14 Monopolists, like firms in other market structure, strive to maximize profit. Microsoft when it first came out with its Windows operating system was thought to be a monopolist. Assume that Microsoft is a monopolist and calculates that at its present output level, marginal cost is $5.50 and marginal revenue is $4.50. Microsoft could increase profits by Multiple Choice   decreasing output and leaving price unchanged.   increasing price and decreasing output.   decreasing price and increasing output.   leaving both quatity and price unchanged.   decreasing price and leaving output unchanged.

(Table: Profit-Maximizing Monopolist) Refer to the table. When this monopolist sells 8 units, its average cost and marginal cost per unit levels are: Price ($) Quantity (Units) Total Cost ($) Average Cost ($) Average Revenue ($) Marginal Cost ($) Marginal Revenue ($) 11  6  17          10  7  19          9  8  21          8  9  23          7  10  25              $2.63 and $2, respectively.   $2.63 and $4, respectively.   $2.56 and $4, respectively.   $2.56 and $2, respectively.

Consider a monopolist facing Demand, Marginal Costs, and Marginal Revenue as illustrated in the graph shown below. When this monopolist maximizes profit, Total Consumers' Surplus is equal to 38.75- 23.15 12.00 7.90 0 0 a b С areas a+b. zero. d 325 465 areas a+b+c+d+e. O areas c+d+e. 680 8 Marginal Revenue Marginal Costs of Production Demand 1,050 1,250 quantity

What is the firm's profit?

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Solution?