As noted in the introduction for Questions 1 through 5, the market is served by a monopolist. Assume (and this is a very safe assumption to make, of course!) that this monopolist is making a positive economic profit.

Add any necessary curve(s) to the graph shown above and graphically indicate:

• The original monopoly price P₀ and monopoly quantity Q₀.
• The "socially optimal" output (the output the Benevolent Dictator would choose) Q_SO.
• The resulting Consumer Surplus CS₀, the resulting Producer Surplus PS₀, and the size of Dead-Weight Loss DWL₀ if there is such a loss.
• Positive economic profits ?₀. (Note that here we asking you to graphically depict the total profits earned by the monopolist and not just the profits earned per unit sold. Recall that you may have to add an additional curve in order to graphically show economic profits on this graph.)

Graph for Question 1 MPCM P Do