concept of monopoly welfare loss
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P = 300 - .001 Q
TC = 9,000,000 + 20 Q + .0004 Q²
a) Find TR, MR and AR.
b) Find the AVC, ATC and MC.
c) Calculate the profit maximization level of activity.
d) Calculate total revenue, total cot and profit or loss at profit maximization level of activity.
e) Calculate elasticity of demand at profit maximization.
f) Calculate the breakeven level of activity.
g) Calculate profit or loss at breakeven.
h) Calculate profit or loss if the firm decided to close the plant in the short run.
i) Graph TR/TC and show/explain profit/loss and break even values.
j) Graph demand, marginal revenue, average total cost, marginal cost and shade profit or loss.
k) With the help of a graph, explain the concept of monopoly welfare loss. Make sure to explain consumer surplus, producer surplus and the distribution (gain/loss) of surplus between consumers and producers.
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Solution Summary
The concept of monopoly welfare loss is explored.
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