Question

1) Consider a monopoly that mines a very rare precious stone. Draw a graph of the demand curve for this stone and the monopolist’s marginal-revenue curve (MR). Next, draw the monopolist’s marginal-cost curve (MC) and average-total-cost curve (ATC). A monopolist maximizes profit by producing the quantity at which marginal cost equals marginal revenue. Indicate this point on the graph by labeling it A. Finally, label the monopoly price and the profit-maximizing quantity.

2) Consider a monopoly that produces a patented medical device. Draw a graph of the demand curve for this device and the monopolist’s marginal-revenue curve (MR). Next, draw the monopolist’s marginal-cost curve (MC) and average-total-cost curve (ATC).

Label the monopoly price and the profit-maximizing quantity. Next, indicate the area on the graph representing the monopolist’s profi

3) Consider a monopoly that produces one-of-a-kind sculptures. Draw a graph of the demand curve for these works of art and the monopolist’s marginal-revenue curve (MR). Next, draw the monopolist’s marginal-cost curve (MC).

Label the monopoly price and monopoly quantity. Next, indicate the efficient quantity in this market. Finally, shade the area that represents deadweight loss (DWL).

Answer 1