Company Gamma is a profit-maximizing monopolist currently earning positive economic profit. Draw a correctly labeled graph for Company Gamma. Label the axes and: Profit-maximizing price

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Company Gamma is a profit-maximizing monopolist currently earning positive economic profit.

1. Draw a correctly labeled graph for Company Gamma. Label the axes and:
   1. Profit-maximizing price (P_E)
   2. Profit-maximizing quantity (Q_E)
   3. Socially optimal price (Pso)
2. Is this firm allocatively efficient? Explain.
3. Shade the area of the firm's profit.
4. Assume this monopolist became able to perfectly price discriminate. Identify if the following would increase, decrease, or remain constant:
   1. The firm's profit-maximizing quantity of output
   2. The firm's profit
5. Company Gamma hires in a perfectly competitive labor market. Draw a correctly labeled labor market graph, labeling the axes, equilibrium wage (We), and equilibrium quantity of labor employed (Q_E).
6. The government makes a licensing exam no longer required for the labor that Company Gamma uses. Illustrate the effect of this change only on the graph from part (e).
7. Will the equilibrium wage rate for labor increase, decrease, or stay the same?