Question

JUST THE QUESTION 16 PLEASE THE FINAL PART OF C IS DEADWEIGHT LOSS AND COMPARE THEM WITH YOUR FINDINGS ON A

co

(b) each firm produces (c) each firm is a price taker. (d) there are few firms in the market. le) each firm observes a horizontal demand curve. Short Questions (10 pts.) 16. A monopoly faces a market demand curve given by Q = 60 - P and a marginal revenue curve given by MR-60 - 20. If MC = AC = 10, (a) calculate profit maximizing price and quantity for the monopoly. (b) calculate monopoly profits, consumer's surplus, and deadweight loss. (e) Suppose now that this firm operates in a perfectly competitive market. (i) calculate profit max- imizing price and quantity. (ii) calculate profits, consumer's surplus, and deadweight loss and

Answer 1

9 -60-8 IP=60-0) [MR=60-20) IMC=AC=10) Monopoly profit is mak when MR-me Gorzo = lo @ = cle=35] Monopoly = 351257_10125)=625 profit o Deadweight loss = 7 = ₂x25x25 = 312.5 Consumer supples a 25 30 = 3 x 25X25 = 312.5 so so ② In case of perfect competition, P=MC=AC=$10 4 oty = 60 to arouint - u consumer scempley = 8 + + = 5 x 50 X50 = 1250 Dwl =0