Question
The following table shows the demand curve facing a monopolist who produces at a constant marginal cost of $6: Price Quantity 18 0 16 4
The following table shows the demand curve facing a monopolist who produces at a constant marginal cost of $6: Price Quantity 18 0 16 4 14 8 12 12 10 16 8 20 6 24 4 28 2 32 0 36 a) Calculate the firm's marginal revenue curve. b) What are the firm's profit-maximizing output and price? What is its profit? c) What would the equilibrium price and quantity be in a competitive industry? d) What would the social gain be if this monopolist were forced to produce and price at the competitive equilibrium? Who would gain and lose as a result? Illustrate the difference between the competitive and monopolistic outcomes in a graph.
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