Answer to Question #69501 in Microeconomics for madeline
There is only one David Garrett, the “David Beckham of Classical Music.” Suppose that Don has obtained the rights to all of Garrett’s recordings, and so he has a monopoly in the market for this music. It turns out that the market demand for Garrett’s CDs is given by P = 120 – 0.2Q, where P is market price and Q is the quantity demanded. Production of these recordings requires paying a fixed cost of $1,000 to rent certain machinery, plus a per-unit payment of $20.
1. What are Don’s profit maximizing output and price?
2. What are Don’s profits, total consumer surplus, and the total deadweight loss at this output and price?