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Consider a market with market demand curve O = 120 - P. [You can use one diagram for multiple parts of the question. Please label everything clearly.] a) Suppose that there is a monopolist in the market with marginal cost curve MC(Q) = 0. [This says that the marginal cost function as a function of O is equal to O. For example, when Q =1, the marginal cost is equal to 1. When ( = 2, the marginal cost is 2.] There is no fixed cost. Find the profit maximising quantity and price for the monopolist. [The marginal revenue curve facing this monopolist is P = 120 - 20.] Supplement your answer with a diagram. Label everything clearly. (7 points) b) What is the total variable cost for producing O = 10? (3 points) c) What is the demand elasticity at the monopoly price? (3 points) d) What are the perfectly competitive industry output and price? (3 points) e) Calculate the welfare deadweight loss of monopoly pricing. (Use perfect competition as the welfare benchmark.) Supplement your answer with a diagram. Indicate the areas of consumer surplus, producer surplus, and deadweight loss on your diagram. (5 points) f) Evaluate the following statement "A monopolist is earning too much profit in the market. Thus, if the government were to levy a per unit production tax on the monopolist, the total surplus would increase." Explain whether or not you agree with this statement. Supplement your answer with a diagram. (7 points) g) Now suppose that in addition to MC(Q) = 0, the monopolist has fixed cost equal to 200. The total cost of production for this monopolist is TC (Q) = 200 + (1/2 )Q2. Is this monopolist a natural monopoly? Explain. (6 point) h) Consider in general the monopoly pricing problem. Assume that the monopolist produces positive output and charges one price to all the output. Assume there is no fixed cost. True or False and explain. "A monopolist facing a positive marginal cost of production and a liner inverse demand curve produces at the elastic portion of the inverse demand curve." Supplement your answer with diagram(s) if appropriate. (6 marks)