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Consider a monopoly that faces a market demand curve given as Q = 100 - P. The marginal cost of production for the monopolist is MC = $10. The monopolist faces total costs given by the following equation: TC=10 +10Q .
1. Write the demand equation in term of Q.
2. Suppose the monopolist charges a single-price for its product. What is the profit maximizing quantity and price for this single-price monopolist?
3. Calculate the monopolist's total revenue (TR), total costs (TC) and total profits at this price
4. Suppose the monopolist charges two different prices: $80 and $55. How many units will the monopolist sell at P = $80? At P = $55?
5. What are the total revenue (TR), total costs (TC) and total profits when the monopolist practices price discrimination? Compare these profits with b.
6. In words, explain what happens to consumer surplus when a monopolist charges different prices to different consumers?
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