Consider the following demand curve: P = 24 - Qd,

which implies that MR= 24 - 2Qd.

Now consider a Monopoly with TC and MC given, respectively, by

TC = Q2+ 36,

MC = 2Q,

where Q is the quantity supplied by the monopolist.

1.Consider a single price monopoly. What is the optimal monopoly priceand the quantity?

2. What is the economic profit of the monopoly? What about consumer surplus and producer surplus?

3.In a perfectly competitive industry such that MC=P (with the same costs and same demand), what would be the quantity produced and the price? What about consumer surplus and producer surplus?

4.If the firm could charge each customer a different price ("perfect price discrimination") equal to their willingness to pay, how much would the monopoly produceand how much a profit would it obtain? What about consumer surplus and producer surplus?

5. True or False: the perfectly discriminatory market is efficient.

6. True or False: a price ceiling would improve efficiency in the monopoly case.