The Following Figure Is a Supply-Demand Diagram That Characterizes the Demand

Essay

The following figure is a supply-demand diagram that characterizes the demand, marginal revenue, and cost curves for a profit-maximizing monopolist.

-The following figure shows the demand curve for Good X in a perfectly competitive market.Later,the government grants one of the firms the exclusive right to manufacture and sell Good X.MR represents the marginal revenue curve of the firm when it operates as a monopoly.The marginal cost of producing Good X is constant at $5.

a)What is the quantity supplied when the market is perfectly competitive? What happens to the quantity supplied once the market changes to a monopoly?
b)What is the market price when the market is perfectly competitive? What is the market price when the market changes to a monopoly?
c)Compare the consumer surplus when the market is perfectly competitive and the consumer surplus when the market is a monopoly.Is there any producer surplus or deadweight loss in either case? If yes,then how much?