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    consumer surplus

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    A monopolist can produce at constant average and marginal costs of AC=MC=5 The firm faces a market demand curve given by Q=53-P

    A. Calculate the profit-maximizing price-quantity combination for the monopolist.Also calculate the monopolists profits.

    B. What output level would be produced by the industry under perfect competition (where price=marginal cost)

    C. Calculate the consumer surplus obtained by consumers in part (b)and show that this exceeds the sum of the monopolists profits and the consumer surplus recieved in part (a). What is the value of the "deadweight loss" from monopolization

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    Solution Summary

    The expert calculates the profit-maximizing price-quantity combination.