Suppose that the following figure depicts a perfectly competitive market.

a. What are the equilibrium price and quantity and at equilibrium what is the value of the producer surplus, the consumer surplus and the economic surplus?

Price: $_____ quantity: ___producer surplus:$___consumer surplus:$______

and economic surplus:$______________

b. What would be the monopolist's price, quantity, producer surplus, consumer surplus, economic surplus and deadweight loss?

Price: $_____ quantity: ___producer surplus:$___consumer surplus:$______

economic surplus:$__________ and deadweight loss:______________

c. At its profit maximizing level of output, monopolist's average cost is $11. Draw an average costcurve and calculate monopoly profit. Show it in your diagram.

d.Explain why monopolies are both productively and allocatively inefficient.

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