Suppose a monopolist has the following cost function C(Q) = 40Q (with marginal cost MC = 40). Suppose it faces market demand of P = 100-½ Q.< (a) Sketch market demand, marginal revenues, and marginal costs. Be neat.< (b) What is the monopolist's optimal level of output, price, and profits? Show your work.< (c) What is the deadweight loss (DWL) associated with the monopoly output? Show your work and explain why the DWL arises.<
Suppose a monopolist has the following cost function C(Q) = 40Q (with marginal cost MC = 40). Suppose it faces market demand of P = 100-½ Q.< (a) Sketch market demand, marginal revenues, and marginal costs. Be neat.< (b) What is the monopolist's optimal level of output, price, and profits? Show your work.< (c) What is the deadweight loss (DWL) associated with the monopoly output? Show your work and explain why the DWL arises.<
Chapter8: Monopoly
Section: Chapter Questions
Problem 15SQ
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