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
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