(b)Consider a new home brew beer shop in town that has a new style of home brew that is not

available anywhere else. This monopoly home brew shop has a demand curve given byP=240-4Qand the shop's total cost is given byC=10 + 2Q+ 3Q . How many home brew kits should this shop sell and what price should they charge to maximise profit? What is the monopoly home brew beer shop profit?

(c) If this shop's home brew kits are the same as all other home brew kits from other shops in the area, then the market is competitive. What would the competitive equilibrium price and quantity be in this case? What is the home brew shop's profit in this case?

(d) Draw a diagram to show the monopoly and competitive equilibria and highlight the dead weight loss caused by the monopoly. Calculate the value of the dead weight loss.