Monopoly

Consider a situation where a monopolist faces the following inverse market demand curve

p = 132 2q

and the following cost function

T C = 12q + 2q²

a) Derive the marginal revenue and marginal cost functions.

b) What are the equilibrium price and quantity if this market behaved as if it were perfectly competitive?

c) Calculate the Consumer Surplus, Producer Surplus and Welfare levels under perfect competition.

d) What are the equilibrium price and quantity when the monopolist produces as a monopolist?

e) Calculate the Consumer Surplus, Producer Surplus and Welfare levels under monopoly.

f) How much deadweight loss does the monopolist create?

g) What could the government do to regulate the monopolist?