Suppose a Monopolist manufactures luxury watches and faces the following demand

curve: P = 150 - 2.5Q, where Q is a watch. Each watch costs $10*Q to produce.

For example, the first watch costs $10. The second watch costs $20. The third watch

costs $30, and so on.

(a) What profit maximizing quantity of watches should the monopolist choose

to produce? (Hint: Recall that the marginal revenue curve has the same y-intercept

as the demand curve, but the slope is twice as steep).

(b) What profit maximizing price should the monopolist choose?

(c) Suppose two new competitors enter the market. The first competitor

produces 4 watches and the second competitor produces 8 watches. If our original

monopolist faces the same costs as before, what quantity should they produce now?

(d) Given the new competition described in part (c), what will be the new market price?