Suppose market demand is given by P=100-Q. The only producer in this market has marginal costs given by MC=2Q.

- How much will this monopolist produce and what price will it charge?

- Calculate the elasticity of demand at the point of equilibrium

- How much is the deadweight loss created by this monopoly?

- Suppose that there is now a toxic byproduct in the production process that pollutes the air. It has been calculated that the air pollution is equivalent to $25 for every unit of output produced by the monopolist. Draw a graph of this monopoly market with externality (include demand, MR, MC, overall social cost curves)

- How much is the deadweight loss created by the monopoly in this market with externality? Explain.