The inverse demand equation for a monopoly firm is P = 100 ? 2Q, and the firm faces constant costs of production in the long run with LAC = LMC = $20.

a. On the axes above, construct the demand and cost curves facing the monopoly firm and label the curves D, LAC, and LMC, respectively.b. On the axes above, construct the marginal revenue curve facing the monopoly firm and label the curve MR.c. Find the profit-maximizing price and output and label this point on demand A.d. What is the maximum amount of profit the monopolist can make?Now suppose the firm?s constant costs increase to $40 per unit (LAC? = LMC? = $40).e. On the axes above, construct the new cost curves facing the monopoly and label the cost curves LAC? and LMC?.f. Now that costs are higher, should the manager raise or lower price to maximize profit? By how much? Label the new profit-maximizing point on demand B.g. Now that costs are higher, what is the maximum amount of profit the monopolist can make?

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100 80 60 40 20 10 30 40 50 60 Quantity Price, marginal revenue, cost (dollars) 20