Consider a single pricing monopolist with a demand equation

| September 11, 2018

Question 1Consider a single pricing monopolist with a demand equation P = 60 – 2Q. It encounters a constant marginal cost of $20 which is also equals to the average total cost.(a) Identify the optimal price and quantity for the monopolist. Illustrate your answers with a suitable diagram.(b) Identify the profit and the consumer surplus of the monopolist at the optimal output.(c) Compare to a perfectly competitive market. If this market were to be a perfectly competitive one, what is the equilibrium price and quantity? Illustrate your answer with a suitable diagram.(d) Compare to a perfectly competitive market, calculate the deadweight loss of the monopoly.

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