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A monopolist can produce at constant average and marginal costs of AC = MC = 5. The firm faces a market demand curve given by Q = 53 - P.
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1.     A monopolist can produce at constant average and marginal costs

of AC = MC = 5. The firm faces a market demand curve given by Q = 53 - P. The monopolist's marginal revenue curve is given by MR = 53- 2Q.
Calculate the consumer surplus obtained by consumers under perfect competition. Show that this exceeds the sum of the monopolist's profits and consumer surplus received under monopoly market. What is the value of the ''dead weight loss'' from monopolization? 

Step-by-step answer

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Subject: Business, Economics

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