Final_PPD503_Fall2020_Prompts(1).pdf - Adobe Acrobat Reader DC X File Edit View Sign Window Help Home Tools Final_PPD503_Fall20... x ? Sign In T 2 / 5 130% 5. [10 points total] A monopolist has a constant marginal cost of production equal to $900 per unit (MC = 900). If it chooses to produce, it must also pay a fixed cost of $2,000,000. If it shuts down, it does not have to pay these fixed costs. Inverse demand for the monopolist's product is given by P = 2250 - 0.1875Q, which implies that the monopolist's marginal revenue is MR = 2250 - 0.375Q. a. [4 points] What price does the monopolist charge? How many units does it sell? What is its profit? (Do not forget to include the $2,000,000 fixed cost in your profit calculation.) b. [2 points] What is the economically efficient price and quantity? c. [2 points] In a single diagram, with quantity on the x-axis and price on the y-axis, show how the prices and quantities from parts a and b.are determined. [Be sure to label all curves in the graph. Your graph need not be drawn to scale, but the prices and quantities from parts a and b must be evident.] d. [2 points] In an effort to help consumers, the government implements a price ceiling of $1200 per unit. If the producer operates under this price regulation, its profit-maximizing quantity would be 5,600 units, its revenue would be $6,720,000, its variable cost would be $5,040,000, and its fixed costs would be $2,000,000. If the producer shuts down, its revenue, variable cost, and fixed cost would all be $0. M 9 W 6:47 PM 11/20/2020 LJ