Question

Suppose a profit maximizing monopolist has total cost and marginal cost as follow:

1. Suppose a profit-maximizing monopolist has total cost and marginal cost as follow: \(\mathrm{TC}=0.1 Q^{2}+Q+10\) and \(\mathrm{MC}=0.2 Q+1\). It faces the demand curve \(\mathrm{Q}=35-5^{\mathrm{P}} .(35\) points \()\)

a) What are the price, output, and profit for this monopolist?

b) Carefully draw the diagram that illustrates your answers.

c) What are the equilibrium price, output, and total profit if this is a perfectly competitive market?

d) Compare the results between monopoly and perfect competition.

e) Calculate the consumer surplus, producer surplus, and deadweight loss if the firm acts as a monopolist. Illustrate your answer with a diagram.

f) Calculate the consumer surplus, producer surplus, and deadweight

loss if this is a perfectly competitive market. Illustrate your answer with a diagram. (You can use the same diagram above.)

g) Does the firm perform economic efficient in each market? Explain.

Answer 1

Answer 2

Answering only first question with first four subparts is mandatory by HomeworkLib policy