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Problem 1 Deadweight Loss Given the following information: Qs = 2P P = Qs/2 QD= 180...

Problem 1

Deadweight Loss

Given the following information:

Qs = 2P

P = Qs/2

QD= 180 - 4P

P = (QD -180)/-4

AR = P = 45-.25Q

TR = 45 - .25Q2

MR = 45 - .5Q

Hint: MC – supply curve

MR = 45 - 5Q

Qs = supply

Qd = demand

  1. A) Using the above information,
  1. 1) Graph and calculate the price-output solution under competitive market assumptions.
  2. 2) How much is the

   consumer surplus

producer surplus and

   total surplus?

  1. B) Calculate the price and the quantity demanded and supplied if the market is run by a profit

maximizing monopoly

  1. C) What is the deadweight loss if the market is run as a profit maximizing monopoly?
  1. D) How much producer surplus is there if the market is operated as a monopoly?
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