Economics Homework Help

2.      Dayna’s Doorstops, Inc. (DD) is a monopolist in the doorstop industry. Its cost is

C = 100 –

5Q + Q2 and demand is P = 55 -2Q.

a)       What price should DD set to maximize profit? What output does the firm produce? How much profit and consumer surplus does DD generate? (8 pts)

b)     What would price and output be if DD acted like a perfect competitor and set MC = P? What profit and consumer surplus would then be generated? (8 pts)

c)      What is the deadweight loss from monopoly power in part a)? (4 pts)