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Suppose a single price monopolist with TC = 20Q faces an inverse demand curve P = 120 - Q and marginal revenue curve MR = 120 - 2Q, where Q is output per period.
(a) What is the marginal cost (MC) for the firm? What is the average cost (AC) for the firm? In a diagram sketch MC, AC and the demand and marginal revenue curves for the firm.
(b) Calculate the profit maximizing output for the firm. What is the monopoly price at this output level? Illustrate in your diagram. Calculate and illustrate the profits earned by the firm.
(c) Briefly explain, illustrate, and calculate the deadweight loss from this monopoly outcome.
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