A Firm with Market Power Faces the Demand Function Q

question 67

Essay

A firm with market power faces the demand function q = 2,000 - 20P. The firm's total cost function is TC(q) = 20q + 0.02q² + 2,000.
a. If the firm behaves as a single-price monopoly, what are its optimal price and output level?
b. Demonstrate that the single-price monopolist's profit-maximizing choice of price and output also maximize producer surplus.
c. Identify the output level that would maximize total surplus.
d. Identify the output level that a perfectly price-discriminating monopolist would produce.

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Definitions:

Alkene

A hydrocarbon that contains at least one carbon-carbon double bond, characterized by the general formula CnH2n and often involved in chemical reactions due to its unsaturation.

Structural Formula

A representation of the molecular structure of a compound that shows how atoms are arranged and bonded to each other in a molecule.

3-Hexene

A type of alkene with a double bond between the third and fourth carbon atoms in its six-carbon chain.

Lewis Line Structure

A representation of molecules where atoms are shown as letters and covalent bonds as lines, illustrating the connectivity of atoms within the molecule.