Q7: Assume that a monopolist is facing a linear demand given as Qd = 180 - 0.5P, and that their marginal cost is represented by a linear function MC = 0.5Q (this is a simplifying assumption so that you do not have to graph quadratic equations). Additionally, assume that the monopolist is required to sell their product at a uniform price.

If the firm is free to choose its own price Pm and quantity Qm, graphically depict this monopoly equilibrium price and quantity. Your graph should include the demand curve, marginal cost curve, and any other curves necessary to identify the equilibrium price and quantity.

Indicate numerically all relevant intercepts for your demand and marginal cost curves on your graph.

Compute and clearly indicate on the graph the exact monopolist equilibrium Pm and quantity Qm that you depicted graphically.

Compute and clearly indicate on the graph the socially optimal price PSOC and quantity QSOC in this market. For this computation, you may assume that the marginal cost curve of the monopolist represents the sum of marginal costs of individual firms.

Q8: Using the graph you produced in your answer to Question 7:

Graphically identify and label the consumer surplus (CSm), producer surplus (PSm), and deadweight loss (DWLm) when the monopolist sells Qm units at price Pm.

Compute and label the numerical values of the consumer surplus (CSm), producer surplus (PSm), and deadweight loss (DWLm) when the monopolist sells Qm units at price Pm. Please remember to indicate the units in which consumer surplus, producer surplus, and deadweight loss are measured.