are no fixed costs of production. What price should the monopolist charge in order to maximize
profit?
A) None of these.
B) $38.
C) $42.
D) $21.
E) $2.
Feedback:
The monopolist should produce the quantity where Marginal Revenue equals
Marginal Cost, and charge the highest price allowed by the demand curve at that quantity.

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Points Earned:
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Correct Answer(s):
D
3.
A monopolist faces a demand curve given by: P = 40 –Q, where P is the price of the good and Q
is the quantity demanded. The marginal cost of production is constant and is equal to $2. There
are no fixed costs of production. What is the deadweight loss associated with this monopoly?

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Deadweight loss is equal to (P
M
-P
C)
*(Q
C
-Q
M
)/2.
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4.
A monopolist faces a demand curve given by: P = 210 – 5Q, where P is the price of the good
and Q is the quantity demanded. The marginal cost of production is constant and is equal to
$60. There are no fixed costs of production. How much profit will the monopolist make?