What is the profit-maximizing level of output

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Problem

Figure 14P-2 presents the demand curve, marginal revenue, and marginal costs facing a monopolist producer.

a. What is the profit-maximizing level of output?

b. What price will the monopolist charge for the quantity in part a?

c. What are the efficiency costs (deadweight loss) of monopoly output/pricing? Provide a numerical answer and illustrate this area on the graph.

d. What is consumer surplus under monopoly output/pricing? Illustrate this area on the graph.

e. What is the loss of consumer surplus under monopoly outcomes versus efficient outcomes? Provide a numerical answer.

760_Figure 14P-2.jpg

Reference no: EM131919150

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