The market demand for a good is Q=20-P. The monopoly supplier of the good has a cost function C=Q2.
(a) If the monopolist were to charge the same price for all goods, how much would it charge? How much would it supply? How much profit would it earn? How much would be the consumer surplus? How much would be the deadweight loss?
(b) Now suppose that the monopolist can perfectly ascertain each buyer’s willingness to pay and can perfectly discriminate. What prices will it charge? How much would it supply? How much would be the consumer surplus? How much would be the deadweight loss?