Suppose that a monopolist's market demand is given by P = 180-2Q and that marginal cost is given by MC = Q/2 a. Sketch this market. Be sure to label the axes and any line (or curve) that you draw. b. Calculate the profit - maximizing monopoly price and quantity. Round the P and Q to the nearest tenth. Show these points on the graph. c. Calculate the price and quantity under perfect competition with a supply curve P = Q/2. Round the P and Q to the nearest tenth. Show these points on the graph. d. What is the consumer surplus (CS) and producer surplus (PS) for both monopoly and perfect competition? Note: use the P and Q rounded to the nearest tenth to calculate CS and PS, and round the CS and PS to the nearest integer). e. What is the deadweight loss due to monopoly? Round to the nearest integer.

Suppose that a monopolist's market demand is given by P = 180-2Q and that marginal cost is given by MC = Q/2 a. Sketch this market. Be sure to label the axes and any line (or curve) that you draw. b. Calculate the profit - maximizing monopoly price and quantity. Round the P and Q to the nearest tenth. Show these points on the graph. c. Calculate the price and quantity under perfect competition with a supply curve P = Q/2. Round the P and Q to the nearest tenth. Show these points on the graph. d. What is the consumer surplus (CS) and producer surplus (PS) for both monopoly and perfect competition? Note: use the P and Q rounded to the nearest tenth to calculate CS and PS, and round the CS and PS to the nearest integer). e. What is the deadweight loss due to monopoly? Round to the nearest integer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Note: Hand written solution is not accepted.

Suppose that a monopolist's market demand is given by
P = 180-2Q and that marginal cost is given by MC =
Q/2 a. Sketch this market. Be sure to label the axes and
any line (or curve) that you draw. b. Calculate the profit
- maximizing monopoly price and quantity. Round the P
and Q to the nearest tenth. Show these points on the
graph. c. Calculate the price and quantity under perfect
competition with a supply curve P = Q/2. Round the P
and Q to the nearest tenth. Show these points on the
graph. d. What is the consumer surplus (CS) and
producer surplus (PS) for both monopoly and perfect
competition? Note: use the P and Q rounded to the
nearest tenth to calculate CS and PS, and round the CS
and PS to the nearest integer). e. What is the
deadweight loss due to monopoly? Round to the
nearest integer.

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Step 1: Introduce the concept of monopoly

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Step 2: Sketch the Market & Calculate the Profit-Maximizing Price and Output

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Step 3: Find the perfectly competitive equilibrium

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