There is a monopoly bridge linking Pleasant Island to the mainland. Its total cost is given by TC = 35 + 40Q

The hourly demand for bridge crossings is given by

P = 136-4Q

Where P is the price, that is the toll charged, and Q is the number of cars crossing. (15 marks)

How many bridge crossings would be purchased, that is, what is the profit maximizing output? (graph please)

What toll. i.e. price would maximize the monopolist's profits?

What are the monopolist's profits at this price?

T

he government wishes to regulate the bridge monopoly by legislating the toll that is charge. At what level should the toll be set to achieve the same number of bridge crossings as would be the case under perfect competition?

e) What will be the number of bridge crossings at the regulated price?

f)What are the monopolist's profits in this situation?