A monopolist facing a market demand Q = 240 - 2p has the total cost function TC(q) = q^2 . Draw carefully the relevant graph with MC, MR, D curves and identify all relevant points, intersections, intercepts.

(a) What is the monopolist's profit maximizing quantity and price?

(b) If the market is reorganized as perfectly competitive, what should be the market price and quantity?

(c) Calculate the DWL associated with the monopoly in (a).

Now the government notices that the monopolist is actually composed of two production plants, the first plant has a total cost function TC1(q) = 2q^2 + 16q

(d) Derive the marginal cost of the second plant, MC2(q).

(e) At the profit maximizing point for the monopoly in (a), how many units are produced in each plant?