Consider a monopolist that produces coal for energy, with demand curve defined by P= 190 - 20 and marginal cost given by MC - 10 + 20. Also, the firm's average total cost is ATC = 100/Q +Q + 10. (Price and costs are in dollars per tonne of coal, while quantity is in thousands of tonnes.) a. Calculate the monopolisť's profit-maximizing quantity, price, and profit. For a monopoly, profit maximization occurs where the marginal revenue equals the marginal cost. b. What would be the competitive output and price if this monopolist operated as a competitive firm? c. Calculate the consumer surplus and producer surplus in this market. For the producer surplus, you must use both the Method by Definition and Variable Cost Method discussed in class, in order to

Consider a monopolist that produces coal for energy, with demand curve defined by P= 190 - 20 and marginal cost given by MC - 10 + 20. Also, the firm's average total cost is ATC = 100/Q +Q + 10. (Price and costs are in dollars per tonne of coal, while quantity is in thousands of tonnes.) a. Calculate the monopolisť's profit-maximizing quantity, price, and profit. For a monopoly, profit maximization occurs where the marginal revenue equals the marginal cost. b. What would be the competitive output and price if this monopolist operated as a competitive firm? c. Calculate the consumer surplus and producer surplus in this market. For the producer surplus, you must use both the Method by Definition and Variable Cost Method discussed in class, in order to

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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