Suppose that a monopolist has the following demand: D(p) = 50 p and that its cost function is given by: C (Q) = 39 + 10Q

a) Formalize the monopolist's problem and calculate the equilibrium in this market (i.e. price, quantity and profits).

b) Find the equilibrium if the monopolist simply wanted to maximize quantity while staying in the market (i.e. not having a loss). (hint: although you can formalize and solve a maximization problem here, we recommend that you just look at the AC and the demand...)

c) Normally we define competitive behavior as P = MC (although you know by know that firms will only do like this if it respects the shutdown or exit condition... nonetheless you should be warned that lots of times economists will simply state that competitive behavior is just doing P = MC without being concerned about shutdown/exit conditions...). Find the equilibrium where the monopolist has a competitive behavior.

d) Calculate the social surplus (consumer surplus + profits) of each case. Which of these 3 cases would a social planner (like the government) prefer?

suppose that a monopolist'hasvthe following\" demand: D(P)=50-p and that its cost function is given by: C(Q) =39+10Q a) Formalize the monopolist's problem and calculate the equilibrium in this market (i.e. price, quantity and prots). b) Find the equilibrium if the monopolist simply wanted to maximize quantity while staying in the market (i.e. not having a loss). (hint: although you can formalize and solve a maximization problem here, we recommend that you just look at the AC and the demand...) c) Normally we dene competitive behavior as P = M 0 (although you know by know that rms will only do this if it respects the shutdown or exit condition... nonetheless you should be warned that lots of times economists will simply state that competitive behavior is just doing P = M 0 without being concerned about shutdown/exit conditions.) Find the equilibrium where the monopolist has a competitive behavior. d) Calculate the social surplus (consumer surplus + prots) of each case. Which of these 3 cases would a social planner (like the government) prefer