A monopolist faces the following cost structure for its product: TC(Q) = 6000 + 300 Q...

A monopolist faces the following cost structure for its product: TC(Q) = 6000 + 300 Q + 5 Q2 MC(Q) = 300 + 10 Q It also faces the following demand function: QD = 180 – 0.2 P Determine the following: 1. Profit-maximizing price and quantity under uniform pricing. 2. Resulting mark-up over marginal cost and profits. 3. Price and quantity that would result from forcing the monopolist to produce the level of output that maximizes total surplus instead. 4. Dead-weight loss to society (of allowing uniform pricing by the monopolist) as a proportion of monopoly profit. 5. (optional) Graph MC(Q), AC(Q), Demand Curve, MR(Q). Identify Q*, P* and shade in the area that represents Total Revenue, the one that represents Total Cost and the one that represents the dead-weight loss to society.

Expert Solution

Rahul Sunny answered 2 years ago

A monopolist faces the demand function Q = 20 – 2P. Its cost function is TC(Q)...

A monopolist faces the demand function Q = 20 – 2P. Its cost function is TC(Q) =0.5Q. Solve for the monopolist’s profit-maximizing price and output and calculate its profit as well as the consumer surplus and deadweight loss.

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