3. Monopoly and dominant firm: Suppose there is a monopolist in a market for a homogenous good. Letting p denote the price of the good, demand is given by D(p) = 120 4p. The monopolist has a constant marginal cost of 10. (a) What is the profit-maximizing price and quantity chosen by the mo- nopolist? (b) Now suppose that the monopolist is a dominant firm facing a com- petitive fringe which offers supply according to Sy(p) = 8p-. What is the residual demand facing the dominant firm? (c) Carefully draw the (i) residual demand curve faced by the dominant firm (ii) the marginal revenue function of the dominant firm. (d) What is the profit-maximizing price and quantity of the dominant firm? e) Compare the monopoly price with the dominant firm price. Which p poly p p price is higher? Which industry structure is better for consumers