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A monopolist faces a linear demand curve given by Q D = 100 - 0.25P and has a linear marginal cost function MC = 40

A monopolist faces a linear demand curve given by QD = 100 - 0.25P and has a linear marginal cost function MC = 40 + Q. Additionally, assume that the monopolist is required to sell their product at a uniform price.

  • If the firm is free to choose its own price Pm and quantity Qm, graphically depict this monopoly equilibrium price and quantity. Your graph should include the demand curve, marginal cost curve, and any other curves necessary to identify the equilibrium price and quantity.
  • Indicate numerically all relevant intercepts for your demand and marginal cost curves (as well as any of the other curves that you may have added) on your graph.
  • Compute and clearly indicate on the graph the exact monopolist equilibrium Pm and quantity Qm that you depicted graphically.
  • Please make sure that you appropriately label all axes in your drawing.

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