(a) Suppose a monopoly has set its market price at the point where its upward sloping average cost curve intersects the demand curve. Establish the price the monopoly is charging, the quantity that is being produced, and the economic profit, if any, that is being earned.

(b) You are called in as a consultant to advise the monopoly firm on what it can do to maximize economic profits. What would you suggest? (As a consultant you are not concerned about any social costs incurred by society.)

Establish the price and quantity you would recommend and the economic profit that would be earned.