A monopolist faces a demand curve P = 210 4Q. The firm faces a constant marginal
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Question:
A monopolist faces a demand curve P = 210 – 4Q. The firm faces a constant marginal cost MC = 10.
Calculate the profit-maximizing monopoly quantity and price.
Suppose that all firms in a perfectly competitive equilibrium had a constant marginal cost MC = 10. Find the long-run perfectly competitive industry price and quantity.
Compare the consumer surplus under monopoly versus perfect competition. Clearly show this in a diagram.
What is the deadweight loss due to monopoly? Is this same as the difference between the consumer surpluses you calculated in the previous part?
Explain the relationship between the MR and prices for a monopolist and explain why the monopolist always procures on the elastic portion of the demand curve.
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