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7. Market demand curve is Q(P)=10-P. There is a monopoly firm in the market with cost structure given by C(q)=2+4q if q>0 and C(q)=0 if q=0. where q is firm's output. (note that since monopoly is the only firm in the market, it provides the market quantity hence q=Q) a. Find and draw the monopolist' average cost and marginal cost curves. b. Find the monopolist's price and quantity. c. Find consumer surplus, monopolist's profits and deadweight loss.

7. Market demand curve is Q(P)=10-P. There is a monopoly firm in the market with cost structure given by C(q)=2+4q if q>0 and C(q)=0 if q=0. where q is firm's output. (note that since monopoly is the only firm in the market, it provides the market quantity hence q=Q) a. Find and draw the monopolist' average cost and marginal cost curves. b. Find the monopolist's price and quantity. c. Find consumer surplus, monopolist's profits and deadweight loss.

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter9: Monopoly
Section: Chapter Questions
Problem 29CTQ: Imagine that you ale managing a small firm and thinking about entering the market of a monopolist....
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7. Market demand curve is Q(P)=10-P. There is a monopoly firm in the market with cost structure given by C(q)=2+4q if q>0 and C(q)=0 if q=0. where q is firm's output. (note that since monopoly is the only firm in the market, it provides the market quantity hence q=Q) a. Find and draw the monopolist' average cost and marginal cost curves. b. Find the monopolist's price and quantity. c. Find consumer surplus, monopolist's profits and dead weight loss.
Transcribed Image Text:7. Market demand curve is Q(P)=10-P. There is a monopoly firm in the market with cost structure given by C(q)=2+4q if q>0 and C(q)=0 if q=0. where q is firm's output. (note that since monopoly is the only firm in the market, it provides the market quantity hence q=Q) a. Find and draw the monopolist' average cost and marginal cost curves. b. Find the monopolist's price and quantity. c. Find consumer surplus, monopolist's profits and dead weight loss.
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