# AGEC 105 Homework Consider a monopolist that faces the demand curve given in the following table.

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1 AGEC 105 Homework 7 1. Consider a monopolist that faces the demand curve given in the following table. a. Fill in the table by calculating total revenue and marginal revenue at each price. Price Quantity Demanded Total Revenue Marginal Revenue b. In economic terms (hint - consider the demand curve), why does total revenue initially increase and then decrease? c. What distinguishes a monopoly from perfect competition? d. What is necessary for a monopoly to exist in the long run?

2 e. On the following graph, graph the demand curve the monopoly faces along with the marginal revenue curve the monopolist faces. Label. f. The firm s marginal cost curve is given by the following equation MC = Q where Q is quantity and MC is marginal cost in dollars. Graph this curve. Hint if you are not sure how to graph, calculate MC when Q = zero and Q = 100. It is a linear line so graph these points and draw a line. Label. g. On your graph, clearly indicate graphically the market quantity and price for the monopolist. h. Indicate consumer and producer surplus and the deadweight loss associated with this monopolist.