3 A Monopolist Faces The Following Aggregate Demand Function Q 32 I P Total Production Costs For The Firm Are Tc 1 (50.97 KiB) Viewed 27 times
3. A monopolist faces the following aggregate demand function: Q = 32 – į P. Total production costs for the firm are TC(Q) = 42Q. (a) Calculate marginal cost, marginal revenues and the equilibrium quantity produced by the monop- olist. (b) Calculate the consumer surplus, producer surplus, and profits in equilibrium.
(c) Suppose now that the monopolist decides to spend 40 to purchase a patent that would allow her to decrease total costs by 12 per unit. Find the new equilibrium quantity and price in this case. (d) Find the new consumer surplus, producer surplus, and profits to the monopolist after the purchase of the patent. (e) From the point of view of the total surplus in the economy, is the introduction of the patent a positive improvement or not?
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