Question

Use the following to answer questions 4-7: All 200 consumers are alike and each has a demand curve for a monopolist’s product of p= 20 –2 q. The cost of production C(Q) = 2Q. Let the monopolist charge a price of $PM for qM unit purchased. Find the menu prices that maximize profits? (The buyer pays menu price PM for quantity qM) 4 What is qM ?

Select one:

a. 0< qM<5

b. 5< qM<10

c. 10< qM<25

d. 25< qM<45

e. None of the above

What is PM?

Select one:

a. 0< PM<50

b. 50< PM<100

c. 100< PM<150

d. 150< PM<200

e. None of the above

4      What is the maximum profit the monopolist can earn in this market? (pi)

Select one:

a. 10,000< pi<15.000

b. 15,000< pi<20.000

c. 20,000< pi<25.000

d. 25,000< pi<30.000

e. None of the above

What is the consumer surplus? (CS)

Select one:

a. 10< CS <20

b. 20< CS <30

c. 30< CS <150

d. 150< CS <250

e. None of the above

Answer 1