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Q. Consider once again the microchip market. Demand for microprocessors is given by P = 35 - 5Q. Where Q is the quantity of microchips (in millions). The typical firm's cost of producing a chip is Ci= 5qi, where qi is the output of firm i.
a. Assume which one company acquires all the suppliers in the industry and thereby creates a monopoly. Illustrate what are the monopolist's profit maximizing cost and total output?
b. compute the monopolist's profit and the total consumer surplus of purchasers.
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In 2003, when music downloading first took off, Universal Music slashed the prices of CDs from an average of $21 to an average of $15.
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