Suppose that a Monopolist has no fixed costs and a fixed Marginal Cost equal to $4 per unit. This monopolist also faces the demand: Q = 28-p 5. [3 points] If this monopolist is a single-price monopolist, then what price would it charge and what Quantity would it produce? What would be the Consumer Surplus (CS), Producer Surplus (PS), and Total Surplus (TS) in the single-price case? Now suppose that this firm can first-degree price discriminate. 6. [2 points] What would be the Consumer Surplus (CS), Producer Surplus (PS), and Total Surplus (TS) in the case where this monopolist can first-degree price discriminate? Now suppose that this firm cannot first-degree price discriminate, but can instead second-degree price discriminate. Now suppose that this monopolist offers the menu of: 12 units for p = $16 • 18 units for p = $10 7. [2 points] Will the above make consumers better off? Will it make firms better off? Now suppose that this monopolist continues to second-degree price discriminate, but offers the a different menu of: ⚫ 9 units for p = $19 • 14 units for p = $14 8. [3 points] What is the new Consumer Surplus (CS), Producer Surplus (PS), and Total Surplus (TS) in this second-degree price discrimination case?

What is the usual shape of a total revenue curve for a monopolist? Why?

How can a monopolist identify the profit-maximizing level of output if it knows its marginal revenue and marginal costs?

Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?