We are considering a monopoly facing the demand QD = 400−5P ⇔ P = 80−0.2QD. Its marginal cost is MC = 0.2Q − 4. (a) Find the monopolist’s marginal revenue equation. (b) Find the monopoly price and quantity in the market and display them in a graph below. Q $ (c) Is this new quantity produced efficient? Explain (d) Suppose the monopolist is able to perfectly price discriminate. What quantity will it sell, at what price? (e) Calculate and compare Producer Surplus, Consumer Surplus and Total surplus with a single price monopolist and a perfectly price discriminating monopolist.
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