Figure 14P-1 presents the demand curve, marginal revenue, and marginal costs facing a monopolist producer.

a. What is the profit-maximizing level of output?

b. What price will the monopolist charge for the quantity in part a?

c. Plot the profit-maximizing price and quantity from parts a and b on the graph.

d. What are the efficiency costs (deadweight loss) of monopoly output/pricing? Provide a numerical answer and illustrate this area on the graph.

e. What is consumer surplus under monopoly output/pricing? Illustrate this area on the graph.

Figure 14P-1:

Transcribed Image Text:

Price (S) 55 50 45 40 35 30 25 20 15 10 MC MR 0 1 2 3 45 6 7 8 9 10 11 Quantity