Briefly explain your answers Fig.1
 

1. Assuming the monopoly pictured above is a profit maximizing monopoly, what price will the monopoly charge for its output?

2. The profit maximizing monopoly will earn $________ profit at the profit-maximizing output.

3. Compute the consumer’s surplus at the profit maximizing output.

4. Compute the monopoly’s revenue at profit–maximizing output.

5. Compute the deadweight loss at profit-maximizing output?

6. If the firm was regulated to produce at the socially optimal output (producer’s surplus is at its maximum), how much would the firm produce?

Transcribed Image Text:

8 7 6 5 4 3 2 1 0 MR ATC=MC 1 2 3 4 5 6 P=D 6 7 8 9 10 Quantity (millions) 8 7 6 5 4 3 2 1 0 MR ATC=MC 1 2 3 4 5 6 P=D 6 7 8 9 10 Quantity (millions)

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1 Assuming the monopoly pictured above has a profitmaximizing policy the price for the monopoly whic... View the full answer