# What would be the value of consumer surplus if the market were perfectly competitive?

E. Please give an easy to understand full Show more I think A B and C are right. I need help though with D & E. Please give an easy to understand full explanation so that I can learn. Thank you. 4. (40 total points) Suppose a monopolist faces the following demand curve: P = 596 6Q. Marginal cost of production is constant and equal to \$20 and there are no fixed costs. a) (8 points) What is the monopolists profit-maximizing level of output? MR = (P-MC)*Q MR = (596 6Q 20)*Q MR = (576 6Q)*Q MR = 576 12Q = 0 Q* = 576/12 Q* = 48 The profit-maximizing level of output would be 48. b) (8 points) What price will the profit-maximizing monopolist charge? P* = 596 6Q* P* = 596 6*48 P* = 308 The profit maximizing monopolist price would be \$308. c) (8 points) How much profit will the monopolist make if she maximizes her profit? TR* = (P*-MC)*Q* TR* = (308-20)*48 TR* = 13824 d) (8 points) What would be the value of consumer surplus if the market were perfectly competitive? e) (8 points) What is the value of the deadweight loss when the market is a monopoly? Show less

Posted in Uncategorized