Task: Demand for microprocessors is given by P=35-5Q, where Q is the quantity of microchips (in millions). The typical firm`s total cost of producing chips is Ci=5qi, where qi is the output of firm i.
1. Suppose that one company acquires all the suppliers in the industry and there by creates a monopoly. What are the monopolist`s profit maximizing price and total output?
2. Compute the monopolist`s profit and the total consumer surplus of purchasers.