# hwk4key - ECON 2020 Homework 4 Name_key P consumer surplus...

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ECON 2020 Homework 4. Name ______key______________ P M C MR D consumer surplus p* q q* The diagram above represents a monopoly. I. a) On this graph, indicate by p* and q* the equilibrium (profit-maximizing) price and quantity. 10 pts. b) Shade in the area of consumer surplus (use stripes or color it in). 10 pts. 1

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P M C MR D q Profits are the shaded rectangle. Dead-weight loss is the patterned triangle. II. Use the monopoly diagram above to show a) total Monopoly profits (6 pts), and b) the dead-weight loss from a monopoly (6 pts). 2
P MC AC D MR p* q q* III. a) (5 pts) This diagram shows (circle the correct answer) (correct answer in boldface): a) Profit-maximization in a monopoly b) A perfectly competitive market c) Long-run equilibrium for a firm under monopolostic competition d) An oligopoly with rivalry. b) (10 pts) On the diagram, show the equilibrium price (p*) and quantity (q*). c) (5 pts) What are the profits for this firm? _____0______ d) (5 pts) True or False (circle correct answer). In this diagram the selling price is equal to Marginal Cost. False 3

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IV. The following information comes from a firm operating under a monopoly. Fixed Costs are \$60.00. Fill in the table, 15 pts.
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hwk4key - ECON 2020 Homework 4 Name_key P consumer surplus...

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