<br/><br/>Suppose that a monopolist faces a demand curve of P = 3000 -2

Question

<br/><br/>Suppose that a monopolist faces a demand curve of P = 3000 -2

Q, where P = price and Q = quantity of the goods produced. It is also known that the monopolist faces a constant marginal cost (MC) of 400.
I.Based on the equation above, construct the monopolist's total revenue (TR) and marginal revenue (MR) equations. [4 points]

II.Find the equilibrium price and quantity that will optimize the monopolist's profit. [3 points]

III.If it is assumed that there is no fixed cost (FC = 0), use the information above to derive the monopolist's variable cost (VC). Also, find themonopolist's operating profit (TR -VC). [3 points]

IV.Show your answers using the relevant graph. [3 points]

V.Use the above information to fill in the table below.
aspect monopoly perfect competition
quantity
price
consumer surplus
producer surplus
deadweight loss

VI.What conclusion can you derive from the table above?

Answer 1

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