Problem:
Imagine that a firm has a monopoly on good with the following demand schedule:
|
Price
|
Quantity
|
|
$10
|
0
|
|
9
|
1
|
|
8
|
2
|
|
7
|
3
|
|
6
|
4
|
|
5
|
5
|
|
4
|
6
|
|
3
|
7
|
|
2
|
8
|
|
1
|
9
|
|
0
|
10
|
Required:
Question 1: What quantity and price will the monopolist produce at if the marginal cost is a constant$4?
Question 2: Compute the dead weight loss from having the monopolist produce, rather than the perfect competitor.