Monopoly and equilibrium

a. Taylor gets smart and realizes that she is the only pie shop around. Calculate the marginal revenue she gets for each additional slice as the change in total revenue (price times sales). Graph this and give the new quantity of sales and the new price.

Shade in the entire area of consumer surplus on your monopoly graph. Shade in the entire area of producer surplus.

Calculate total consumer and total producer surplus under the monopoly situation.

Compare the sum of consumer and producer surplus for the monopoly with the results for perfect competition. Which is better for consumers? Which is better for producers? Which is better for society? Explain.