Suppose that a monopolist's market demand is given by P = 100 - 2Q and that marginal cost is given by MC = Q/2.
a) Calculate the profit-maximizing monopoly price and quantity.
b) Calculate the price and quantity that arise under perfect competition with a supply curve P = Q/2.
c) Compare consumer and producer surplus under monopoly versus marginal cost pricing. What is the deadweight loss due to monopoly?
d) Suppose market demand is given by P = 180 - 4Q. What is the deadweight loss due to monopoly now? Explain why this deadweight loss differs from that in part (c).