Statistics Solutions

(See Solution) The following table shows the demand curve facing a monopolist who produces at a constant marginal cost of $10 P Q 18 0 16 4 14 8 12 12 10 16 8

Question: The following table shows the demand curve facing a monopolist who produces at a constant marginal cost of $10

P Q
18 0
16 4
14 8
12 12
10 16
8 20
6 24
4 28
2 32
0 36
  1. Calculate the firm’s marginal revenue curve.
  2. What are the firm’s profit maximizing output and price? What is its profit?
  3. What would the equilibrium price and quantity be in a competitive industry?
  4. What would the social gain be if this monopolist were forced to produce and price at the competitive equilibrium? Who would gain and lose as a result?

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