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Unformatted text preview: market demand by altering quantity but keeping the same price. 4. A monopolist faces a demand curve given by Q = 10P3 . Its cost function is C(Q) = 2Q. Find the optimal level of output and price. HINT: Use the fact that this is a constant elasticity demand function, with an elasticity at all points equal to 3. 5. Consider a monopolist with demand given by Qd = 20.5P and MC = 4 + 2Q. a . Find the equilibrium P & Q. b . Find the equilibrium P & Q when government imposes a price ceiling of $24. c. How does the total surplus (consumer plus producer) compare between the case described in part b (a monopolist subject to a price ceiling of $24) and a perfectly competitive market with the same demand function and a supply curve of P = 4 + 2Q. Explain your answer and illustrate with a graph....
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 Winter '09
 PARMAN
 Economics, Microeconomics

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