Monopoly and Duopoly

4. (Exam 2016) In 1998, with the introduction of the Mach3 shaving line, Gilette was the only seller of multi-blade razors and multi-blade replacement cartridges. The U.S. annual inverse demand for multi-blade replacement cartridges was given by = 1300 2, where P is measured in cents per cartridge and Q in millions of cartridges. Gilette incurs a constant marginal cost of $1 [use 100 cents] for each cartridge supplied.

a. Given the demand and cost information above, how many replacement cartridges did Gilette supply? What was the price of Gilette replacement cartridges? Illustrate your answer on a diagram in which you place Q on the x-axis and P on the y-axis. Make sure to indicate all relevant intercepts.

b. Is the level of output that you found in a. Pareto efficient? Explain in less than five lines.