Problem 1.1:
Assume a monopolist has MC = 10 and no fixed costs. The monopolist faces a
demand curve of P = 100 - 3Q. Find the equilibrium quantity and price.
[Solution]
Problem 1.2:
Assume a monopolist has MC = 10 and no fixed costs. The monopolist faces a
demand curve of P = 100 - 2Q. The government imposes a tax of 10 dollars for
every unit sold. Find the equilibrium quantity and price.
[Solution]
Problem 1.3:
True or False: A monopolist who faces a monotonically decreasing demand curve
will always make profits.
[Solution]
Problem 1.4:
Assume a monopolist has MC = 20 and no fixed costs. The monopolist faces a
demand curve of P = 100 - 4Q. Calculate the deadweight loss.
[Solution]
Problem 1.5:
For a non-Giffen good (a good with a non-increasing demand curve), show that
price can never be less than marginal revenue.
[Solution]
