A monopoly's inverse demand function is p=160-4Q and it has no fixed costs. Initially marginal cost is 12 (A constant MC and no fixed costs means ATC = MC, Can you prove this to yourself?). Determine the price, quantity, consumer surplus, profit, total surplus, and deadweight loss .
A monopoly's inverse demand function is p=160-4Q and it has no fixed costs. Initially marginal cost is 12 (A constant MC and no fixed costs means ATC = MC, Can you prove this to yourself?). Determine the price, quantity, consumer surplus, profit, total surplus, and deadweight loss .
Chapter8: Monopoly
Section: Chapter Questions
Problem 15SQ
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and it has no fixed costs. Initially marginal cost is 12 (A constant MC and no fixed costs means |
Expert Solution
Step 1
Given Information:
- Inverse demand function: p=160-4Q
- MC=12, and ATC=MC=12
We have to compute:
- Price (P)
- Quantity (Q)
- Profit
- Consumer Surplus (CS)
- Total Surplus (TS)
- Deadweight loss (DWL)
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