Let weekly demand for flu vaccines be represented by the following demand curve:P = 400-(1/2)Q

And suppose that FluOz is the monopoly supplier of vaccines to Australia with a marginal cost curve:MC = 200;

a) On a clearly labeled diagram, sketch the demand, marginal revenue, and marginal cost curves and calculate and show the monopolist's profit-maximising quantity (QM) and the price that will be charged in the market (PM).

b) Calculate the consumer surplus and producer surplus at the monopoly equilibrium and the deadweight loss of the monopoly outcome compared to the socially efficient quantity and show these on your diagram.

Finally, suppose that FluOz's average total cost curve is ATC(Q)=100/Q+200.

c) Calculate FluOz's monopoly profit and explain what would happen if FluOz was forced to charge the socially optimal price for water.