Assume a monopolist faces a market demand curve P = 100 - 2Q and has the
short-run total cost function C = 640 + 20Q
(a) What is the profit-maximizing level of output?
(b) ) What are the monopolist's profits?
(c) Graph the marginal revenue, marginal cost, and demand curves, and show the area that represents deadweight loss on the graph and explain why.
1(d)What would the competitive price and quantity be? Calculate the magnitude of the deadweight loss.
(e) If the government imposed a maximum price on the monopolist equal to the competitive price, how would this affect total welfare? Is this policy sustainable in the long run? What is the optimum and sustainable price ceiling the government could impose?
(f) If, instead, the government imposed a $4 per-unit tax on the monopolist, how would the equilibrium price and quantity change? What is the change in the consumer surplus?
How much is the revenue from the tax to the government?
only question e and f