Based on market research, a monopolist obtains the following information about the market demand and production...

Based on market research, a monopolist obtains the following information about the market demand and production costs:

Demand: ? = 1,000 − 10?

Marginal Revenue: ?? = 1,000 − 20?

Marginal Cost: ?? = 100 + 10?

where ? is the quantity and ? is the price.

a. Draw demand, MR and MC curves. Clearly display the price and quantity the monopolist chooses. Y-axis measures costs ($) and X-axis measures quantity in your graph.

b. Find the price and quantity that maximize the firm’s profit.

c. Calculate the total surplus and deadweight loss from monopoly.

d. Find the price and quantity that maximize social welfare (total surplus).

Expert Solution

Rahul Sunny answered 8 months ago

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