Answer questions 16-21 based on the following information. The demand function f

Question

Answer questions 16-21 based on the following information. The demand function faced by a s given by: P 54-Q. The firm's cost function is given by: TC 100+ 60+Q The firm's cost function is given by: TC-100 + 6Q+Q profit maximizing output level 1A Me 16 In this situation the monopoly's a. 12 16 24 d. 30 17 In this situation the monopoly's profit maximizing price is 42 St-16 c. 30 d. 24 18 In this situation, the monopoly' profit is 278 230 c. 156 d. 188 19 In this situation, the consumer surplus is a. 78 b. 72 c. 66 60 20 In this situation, the deadweight loss from monopoly is 16 20 c. 24 d. 28 With first-degree price discrimination, the monopolist would produce until P-MC and extract all consumer surplus. What is the new monopoly profit? 21 a. 326 b. 208 c. 284 288

Explanation / Answer

Ans)

16.
a. 12

TR=PQ=(54-Q)Q
MR=dTR/dQ
MR=54-2Q
TC=100+6Q+Q^2
MC=dTC/dQ
MC=6+2Q
A monopolist produces where MC=MR
6+2Q=54-2Q
4Q=48
Q=12

17.
a. 42

P=54-Q
P=54-12=42

18.
d. 188

Profit=TR-TC
Profit=(42*12)-(100+6*(12)+(12*12))
Profit=188

19.
b. 72

if P=54-Q ; if Q=0 then P=54
Consumer surplus=0.5*(54-42)*(12)=72

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