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The market demand for a particular good in city A is given by QA = 32...

The market demand for a particular good in city A is given by QA = 32 − 0.5PA (for PA ≤ 64). This market is served by a single firm (monopoly) whose marginal cost of production is 4 dollars per unit (so total cost of producing Q units is 4Q). (a) Find the equation for the firm’s marginal revenue function. Graph the demand, marginal cost, and marginal revenue curves on one graph. (b) What are the profit-maximizing price and quantity for the monopolist? What is the profit margin (price minus marginal cost, divided by the price) of the monopoly? (c) Calculate the total monopoly profit in city A. (d) What is consumer surplus in this market? How large is the deadweight loss resulting from monopoly pricing?

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Rahul Sunny answered 2 years ago
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