(Answered) Question 1 consider a single pricing monopolist with a

Management Studies

Question 1: Consider a single pricing monopolist with a demand equation P = 60 - 2Q. It encounters a constant marginal cost of $20 which is also equals to the average total cost.

(a) Identify the optimal price and quantity for the monopolist. Illustrate your answers with a suitable diagram.

(b) Identify the profit and the consumer surplus of the monopolist at the optimal output.

(c) Compare to a perfectly competitive market. If this market were to be a perfectly competitive one, what is the equilibrium price and quantity? Illustrate your answer with a suitable diagram.

(d) Compare to a perfectly competitive market, calculate the deadweight loss of the monopoly.

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