Question 3: Inflation and GDP

Consider the following diagram of a single price monopoly

1. What is the profit maximising quantity of the monopolist will produce? (1 mark)
2. Assuming that the monopoly is at its profit-maximising quantity, explain how you find the equilibrium and identify the value of its marginal revenue, average total cost and price (3 marks).
3. Calculate the monopolist's profit (2 marks).
4. In Figure below, what quantity corresponds to a competitive equilibrium? Explain how this compares to the monopoly quantity (4 marks).