A monopolist faces the following demand curve and marginal cost curve: P = 40 Q and MC
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Question:
A monopolist faces the following demand curve and marginal cost curve: P = 40 Q and MC = 2. Answer the following questions.
(a) What is the prot-maximizing price and quantity?
(b) Calculate the area of deadweight loss associated with being a monopolist. Illustrate and label this area in the graph below.
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