. Consider a monopolist that has a constant marginal cost of $1 per unit. The demand for...
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Question:
. Consider a monopolist that has a constant marginal cost of $1 per unit. The demand for the product has a choke price of $9. If the price was $4, the quantity demanded would be 5.
1. Write down the total cost function for the monopolist.
2. Assuming that the quantities demanded have a linear relationship with prices, write down the demand function that the monopolist faces.
3. Write down the maximization problem of the monopolist, when they choose prices.
4. What price will the monopolist charge?
5. What is the quantity produced by the monopolist?
6. What is the profit of the monopolist?
7. What is the implied consumer surplus?
8. What is the implied producer surplus?
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