1000 900 $00 700 600 500 400 300 200- 100 MC ATC MR 5 10 15 20 25 30 35 40 Quantity Refer to the above figure. What price and quantity pair in the figure above will the monopolist choose? a. P = $15; Q = 400 b. P $400; Q = 25 C. P = $500; Q = 25 d. P= $700; Q = 15

Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?

Is a monopolist allocatively efficient? Why or why not?

What is the usual shape of a marginal revenue cuwe for a monopolist? Why?