Problem
A single firm monopolizes the entire market for Batman masks and can produce at constant average and marginal costs of AC = MC = 10.
Originally, the firm faces a market demand curve given by
Q = 60- P
a. Calculate the profit-maximizing price-quantity combination for the firm. What are the firm's profits?
b. Now assume that the market demand curve becomes steeper and is given by Q = 45 -:5P with the marginal revenue function given by MR = 90- 4Q: What is the firm's profit-maximizing pricequantity combination now? What are the firm's profits?
c. Instead of the assumptions in part b, assume that the market demand curve becomes flatter and is given by Q = 100 -2P with the marginal revenue function given by MR = 50- Q: What is the firm's profit-maximizing pricequantity combination now? What are the firm's profits?
d. Graph the three different situations of part a, part b, and part
e. Using your results, explain why there is no meaningful ‘‘supply curve'' for this firm's mask monopoly.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.