Problem 2 Consider a monopolistic firm deciding how many units of a new product to sell on the market. The firm’s cost function is given by C(q) = 2q2. The inverse demand of this product is given by p = 120 − 2q, where q is the quantity and p is the price.What would the consumer surplus and producer profit be if the firm was a price taker? Calculate the corresponding quantities and show them on a graph.Assume the firm cannot price discriminate among its Find the monopoly quantity, price, and profit.Calculate the deadweightCalculate the elasticity of demand at the optimal (profit maximizing) level of production. Is the monopolistic firm operating on elastic or inelastic part of the demand?

Approach to Solving the Question Understand the Problem Components:Cost Function: 𝐶(𝑞)=2𝑞2Inverse…

Answered: Problem 2 Consider a monopolistic firm…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Problem 2 Consider a monopolistic firm deciding how many units of a new product to sell on the market. The firm’s cost function is given by C(q) = 2q². The inverse demand of this product is given by p = 120 − 2q, where q is the quantity and p is the price.

What would the consumer surplus and producer profit be if the firm was a price taker? Calculate the corresponding quantities and show them on a graph.
Assume the firm cannot price discriminate among its Find the monopoly quantity, price, and profit.
Calculate the deadweight
Calculate the elasticity of demand at the optimal (profit maximizing) level of production. Is the monopolistic firm operating on elastic or inelastic part of the demand?

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