Assume a monopolist faces the demand curve of and a total cost curve of
SRTC(Q) = 2Q + 0.025Q2.
A) What do you notice about fixed costs in this case?
B) Determine the monopolist’s profit maximizing level of output and price, as well as the amount of profit earned.
C) Compare the consumer surplus under monopoly production to the consumer surplus achievable if the product was supplied by a perfectly competitive market.