Calculate the deadweight loss of the monopoly

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The demand for milk and the total costs of dairy production are specified by the following:

P(q) = 125 - q

TC(q) = 35q

Suppose there is a monopoly in the industry. Determine the profit maximizing price and output for the monopolist. Clearly display the process of deriving each key component of the profit maximization formula.

Graph the profit maximizing price and output, clearly identifying the marginal cost (MC), average cost (AC), demand function and marginal revenue (MR).

Calculate the consumer and producer surpluses for this industry and display these areas on new graph.

If this industry was perfectly competitive, how would the equilibrium price and output differ, and what impact would this have on consumer and producer surpluses.

Calculate the deadweight loss of the monopoly.

Reference no: EM133063322

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