a) What is the reason why we can have monopolies and account for characteristic features?

A monopolist has marginal costs of NOK 40. The demand function is further provided by:

P = 2000-4x

b) How much should the monopolist produce and what price should be put on the product for the monopolist to maximize profits?

c) Explain what socio-economic surplus is and calculate socio-economically optimal production in this market.

d) Illustrate the solution in problem b) graphically and calculate the consumer profit, producer profit and efficiency loss. Explain why there is a loss of efficiency.