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Unformatted text preview: exactly that much. iii) How much profit does each firm make? Profit = TR TC Profit = P*Q [(Q^2)+50] P=50, Q=25 and substitute into above equation. iv) What is the value of the consumer and producer surpluses in this equilibrium? CS=(10050)*(50)/2 = (50^2)/2 ; PS = (50)(50)/2 = (50^2)/2 2. Now suppose that the rest of the producers leave the market so that only one is left to monopolize the market. The market demand curve is the same as in #1. i) What is the marginal revenue function? MR=1002Q ii) What how many units will the monopoly sell? What price will they charge? Set MR=MC 1002Q=2Q Q=25. If Q=25, then P=100Q=10025=75. iii) How much profit will the monopoly make? What is the new consumer surplus? Profit = TR TC Profit = P*Q [(Q^2)+50] P=75, Q=25 and substitute into above equation. CS=(10075)*(25)/2 = (25^2)/2 iv) What is the deadweight loss due to monopolization? DWL= (7550)(5025)/2= (25^2)/2...
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 Winter '09
 bandy

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