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A firm with market power faces the demand function q = 2,000 - 20 P . The firm's total cost function is TC ( q
A firm with market power faces the demand functionq= 2,000 - 20P. The firm's total cost function isTC(q) = 20q+ 0.02q2+ 2,000.
a. If the firm behaves as a single-price monopoly, what are its optimal price and output level?
b. Demonstrate that the single-price monopolist's profit-maximizing choice of price and output also maximize producer surplus.
c. Identify the output level that would maximize total surplus.
d. Identify the output level that a perfectly price-discriminating monopolist would produce.
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