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Find the profit-maximizing price

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4. Assume that a perfectly competitive industry that produces eyelets is taken over by a single firm and transformed into a monopoly. The monopolist faces the following demand function: Q = 100 - 2P. Marginal and average costs are equal and constant at $20 per unit. (There are no fixed costs) Again, it is recommended that you draw a graph .

a. Find the profit-maximizing price and output of the new monopoly.
b. Find the level of monopoly profits.
c. Calculate the efficiency loss or deadweight loss associated with monopolization.
d. Now assume that the absence of competition under monopoly over time raises costs of production to $30 per unit. Calculate the increase in production costs due to X-Inefficiency.

Reference no: EM13330910

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