Q2. The marginal revenue and marginal cost functions for a monopolist firm that mines diamonds are given by: () = 10 2 () = 2 + 2 What is the inverse demand for diamonds?

(1) What is the profit-maximizing level of output?

(2) Which price does the monopolist charge at this level of output?

(3) If () = 2 + 2 + 2 , what equation defines TFC? what equation defines TVC? what equation defines ATC?

(4) Does the monopolist make economic profit?

(5) How much profit/loss does the firm earn?

(6) What is the economic profit if instead fixed costs were 8?

(7) What if they were 10?

(8) What does this tell us about a monopolist's profit and the costs of obtaining a monopoly?