Scenario 11.1 Maui Macadamia Inc. has a monopoly in the macadamia nut industry. The demand curve, marginal revenue and marginal cost curve for macadamia nuts are given as follows:

P = 360 - 4Q; MR = 360 - 8Q; MC = 4Q

1. What level of output maximizes the sum of consumer surplus and producer surplus?

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

3. At the profit-maximizing level of output, what is the level of consumer surplus?

4. At the profit-maximizing level of output, what is the level of producer surplus?

5. At the profit-maximizing level of output, what is the deadweight loss?

Answer rating: 100% (QA)

1 To find the level of output that maximizes the sum of consumer surplus and producer surplus we need to find the level of output where marginal reven... View the full answer