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Let's assume that there is a specific market for cellphones. In a monopoly, there would only be one cellphone producer/seller. If the total cost (TC)
Let's assume that there is a specific market for cellphones. In a monopoly, there would only be one cellphone producer/seller. If the total cost (TC) for the monopolist is TC=10Q, where Q is quantity of cellphones. The marginal cost (MC) is the result of the TC, which means MC=10. Assuming the demand curve is P=100-Q, with P being the price. For a monopolist, their marginal revenue (MR) would be MR=100-2Q. So they would want to maximize profit by having MC=MR, so 10=100-2Q. If I solve for Q, that gives me Q=45. If put Q=45 into the demand curve, I get P=100-45 = $55. To figure out the monopolist profit, I need to do the formula TR-TC = (P*Q-TC). Given the information, I would get (55*45-10*45)= $2025 of profit. The deadweight loss for this particular example is shown by the area of the triagle between the demand curve and the MC curve. This should be 0.5*(90-45)*(55-10) which equals $1125. The profit in the long run would be zero because in perfect competition with many firms, each has the same TC as the monopolist. So, each firm would be MC=P to get the most profit. If 10=P then we would get Q=100-10
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