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Suppose that a monopolists market demand is given by P = 100 - ?2Q and that marginal cost is given by MC = Q/2.

a)Calculate the profit-maximizing monopoly price and quantity.

b)Calculate the price and quantity that arise under perfect competition with a supply curve P = Q/2.

c)Compare consumer and producer surplus under monopoly versus marginal cost pricing. What is the deadweight loss due to monopoly?

d)Suppose market demand is given by P = 180? - 4Q. What is the deadweight loss due to monopoly now? Explain why this deadweight loss differs from that in part (c).

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9685313

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