6. Curse Purge Plus is a monopolist in the curse removal market They face an inverse...

6. Curse Purge Plus is a monopolist in the curse removal market They face an inverse demand curve given by P=200-4Q, where Q is the number of curse removals they sell. Their cost function is C(Q)=10+8Q.

SOLVE D AND E ONLY

a. Write down the company’s profit function

b. Find the first-order condition for profit maximization.

c. Find the profit-maximizing price and quantity, and the maximum profit.

d*. Calculate the consumer surplus in the market at the monopoly price and quantity.

e*. If price were set equal to marginal cost, what would be the value of consumer surplus and profit? At the monopoly price and quantity, find the value of the deadweight loss.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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