3 Sugarsicles Is A Monopolist In The Candy Cane Market Its Total Cost Is C 10 Q 0 2q Where Q Is Measured In Th 1 (51.83 KiB) Viewed 63 times
3. Sugarsicles is a monopolist in the candy cane market. Its total cost is C = 10 + Q + 0.2Q², where Q is measured in thousands of candy canes. The demand curve it faces is p = 9 -0.2Q (again, Q is measured in thousands) a) What price and output should Sugarsicles set to maximize profit? How much profit and consumer surplus does Sugarsicles generate then? Also draw a graph to illustrate your answer. [10 Marks, (5 of which are for graph)]
b) What would output be if Sugarsicles acted like a perfect competitor and set MC = P? What profit and consumer surplus would then be generated? Also illustrate this on a graph. [7 Marks, (3 of which are for graph)] What is the amount of deadweight loss (be sure to indicate the area in your graph as well)? [3 Marks]
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