Because of a patent, Company Z has a monopoly on a new product, which it brands Uusi. Company Z is a profit-maximizing firm and is earning positive economic profits in the short run.

1. Draw a graph of Company Z's market for Uusi.
   1. Label the profit-maximizing price (Pm).
   2. Label the profit-maximizing quantity (Qm).
2. Shade the area of deadweight loss.
3. What would happen to Company Z's economic profits in the long run without government intervention?
4. Assume that Pm = $10 and the average total cost at the profit-maximizing quantity is $5. If the firm is earning $600 in economic profit, how many units of Uusi is it producing?
5. On your graph from part (a), label the allocatively efficient price (Pe) and quantity (Qe).
6. Is Company Z producing in the elastic or inelastic range of its product's demand? Explain.
7. Based on the information from part (d), what is the total revenue of Company Z?
8. Assume that Company Z becomes able to perfectly price discriminate.
   1. What would happen to its output?
   2. What would happen to consumer surplus?