HW6(1) - profits equal producer surplus minus fixed costs)....

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Homework 6 Question 1: Monopoly Consider the following demand curve: P = 24 – Q d , which implies that MR= 24 – 2Q d. Now consider a Monopoly with TC and MC given, respectively, by TC = Q 2 + 36, MC = 2*Q, where Q is the quantity supplied by the monopolist. a. Consider a single price monopoly. What is the optimal monopoly price and quantity? What is the economic profit of the monopoly? b. What quantity would a perfectly competitive industry (with the same costs and facing the same demand) produce? c. Producer surplus is the area below the price and above the MC curve (note that
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Unformatted text preview: profits equal producer surplus minus fixed costs). Graphically show the consumer & producer surplus in this market when the market was in perfect competition and under a monopolistic environment. d. Evaluate numerically producer surplus, consumers surplus in this market when the market is in perfect competition and under monopolistic environment. e. Is the outcome under single- price monopoly efficient?...
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