Please show work.
Monopoly
The demand is QD= 9,000 – .3 P and TC = 6,000 Q.
1. What price should we charge? How much profit can we make?
2. What quantity of output should we make?
3. How much surplus will result from this (consumer and producer)? How much deadweight loss it there? Explain and add graph is necessary.
Q = 9000-0.3P
Or,
0.3P = 9000-Q
P = 30,000 - 3.3Q
MR = dPQ/dQ = 30,000-6.6Q
TC = 6000Q
MC = dTC/dQ = 6000
A)
A monopoly sets prices at the point MR = MC
30,000-6.6Q = 6,000
Q = 3600 approx
P = $18000
Profit = (P-MC)Q = (18000-6000)3600 = $43,200,000
B)
Q = 3600 units approximately
C)
Consumer surplus = (1/2)(P where Qd is 0 - P)(Q)
Consumer surplus = (1/2)(30000-18000)(3600)
Consumer surplus = $21,600,000
Producer surplus = (P-MC)Q
Producer surplus = (18000-6000)3600
Producer surplus = 43,200,000
Dead weight loss = (1/2)(P-MC)(Q when P equals MC - Q of monopoly)
Dead weight loss = (1/2)(18000-6000)(7200-3600)
Dead weight loss = 21,600,000
Please show work. Monopoly The demand is QD= 9,000 – .3 P and TC = 6,000...
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