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The diagram above shows the cost and revenue curves for a monopoly.
a.
Identify the following:
i. Unregulated price and output P5 ct Q1
ii. The socially optimal (allocatively efficient) price and output.P* & Q: = C
iii. The fair return price and output P: & Qr
b. Identify the line segment showing the elastic range of the dernand curve and explain how you
determine this. A-tr)
c. Suppose that the industry depicted in the graph became perfectly competitive without
changing the demand or cost curves. Identify the price and output that would prevail in the
perfectly competitive market.Pr & Q:
d. Using labeling on the graph above, identify the following:
i. The consumer surplus if the industry was perfectly competitiveACPa
ii. The consumer surplus for the monopoly ABPI
iii. The area of dead-weight loss for the monopoly ltf, & []nlabeled, w'here I]g
hits Qr or SIR = I\{C.
e. Assume this monopoly started to practice price discrimination without changing its costs.
Compared to regular monopoly, what would happen to:
i. Output increases
ii. Profit incrcases"