Q1. (2 points) Assume that Seoul Power has a monopoly on the provision of electricity to the Seoul Metropolitan area. The monthly demand for services by households in this market is given by Q^D= 12 - P^D. This translates to a marginal revenue of MR = 12 - 2Q. The marginal cost of electricity production is MC = 2Q. With this information, answer the following questions, Q1-1 & Q1-2.

Q1-1. Calculate Seoul Power's chosen price and quantity with which it can maximize its profit.

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Q1-2. Calculate Seoul Power's profit.

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Q2. (4 points) Suppose a monopolist has a demand curve that can be expressed as P^D = 90 - Q^D.

The monopolist's marginal revenue curve can be expressed as MR(Q) = 90 - 2Q. The monopolist has constant marginal costs and average total costs of $10. With this information, answer the following questions, Q2-A ~ Q2-D.

Q2-A. The profit-maximizing monopolist will produce an output level of ... ( )

a. 80 units

b. 40 units

c. 20 units

d. 10 units

Q2-B. The profit-maximizing monopolist will charge a price of ... ( )

a. $50

b. $40

c. $20

d. $10

Q2-C. The profit-maximizing monopolist will earn profits of ... ( )

a. $6400

b. $3200

c. $1600

d. $800

Q2-D. The profit-maximizing monopolist will have a deadweight loss of ... ( )

a. $6400

b. $3200

c. $1600

d. $800

Q3. (10 points) The market demand function is given by Q^D = 20 - P^D. With this demand information, answer the following questions, Q3-A ~ Q3-H.

Situation 1) Assume that consumers face a perfectly competitive firm with a total cost function of TC(Q) = 10Q, MC(Q) = 10.

Q3-A. What is the marginal revenue (MR) of the firm?

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Q3-B. What are the competitive equilibrium price & quantity?

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Q3-C. What is the maximized profit of the competitive firm? ( )

Q3-D. What is the consumer surplus in this competitive market?

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Situation 2) The market situation has changed, and now the consumers face a monopolist firm with TC(Q) = 4 + 2Q, MC(Q) = 2.

Q3-E. The following is the table that shows the revenue changes of this monopolistic firm. Fill the blanks in the grey area.

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