I've been trying so hard to solve this question if anyone can help me I will really appreciate that. :)
3. (20 points) Please show all your work in this question to receive full credit, and it must be neat enough to be clear. John's Kefir Ko-op is the only supplier of kefir in SSM and it's a long drive to Sudbury, the nearest town with any decent natural food store. As such, John has a local kefir monopoly. The demand for the kefir in SSM is given by: Q = 2-0.1P where P is the price of a gallon of kefir and Q is the quantity sold in ten thousand gallons. John's costs are given by: C = 40 + 10Q2 cost a. (2 points) Graph John's demand curve. Be sure to carefully label the axes and the intercepts. b. (2 points) What is the John's marginal revenue function (add to graph)? c. (2 points) What is John's marginal cost (add to graph)? d. (2 points) What are the equilibrium price and quantity that maximize the John's profit? (e. (2 points) Describe how the monopolist's price and output compare to a perfectly competitive C industry? (2 points) What is the consumer surplus in this market? (3 points) What is the deadweight loss from monopoly in this market? (Hint: It will be easier for you to have the complete graph at this point in order to solve this problem) h. (3 points) What is the Lerner Index for John's Kefir Ko-op at his profit-maximizing price and output? How would you interpret this number? i. (2 points) John's Kefir is going so well, John decides to expand by opening a Ko-op in Wawa. Residents of Wawa are much more health conscious than SSM, so John estimates the price elasticity of demand for Kefir will be -2.0. Assuming that John can prevent resale between the two towns by requiring residents to become Ko-op members, should John charge a higher or lower price in Wawa than in SSM? Briefly explain your reasoning here. j. (Bonus: 2 points) How much should John charge for a gallon of Kefir in Wawa? The marginal cost is the same in both markets