A monopolist faces a demand curve
A monopolist faces a demand curve given byÂ
P = 220 – 3QÂ
where P is the price of the good and Q is the quantity demanded.Â
The marginal cost of production is constant and is equal to $40. There are no fixed costs of production.Â
Hint: To answer the following questions, it may be helpful to draw a graph!
What quantity should the monopolist produce in order to maximize profit?Â
What price should the monopolist charge in order to maximize profit?Â
How much profit will the monopolist make? Â
What is the deadweight loss created by this monopoly? (Hint: compare the monopoly outcome with the perfectly competitive outcome).Â
Monopoly deadweight loss =Â Â
If the market were perfectly competitive, what quantity would be produced?
Answers
Status NEW
Posted 22 Jun 2017 02:06 AM
My Price 7.00
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