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Microeconomics

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Moderate

Monopoly: Underachieve, Overprofit!

MICRO-JD0GRJ

Consider a monopoly with the following curves:

Marginal cost $MC = 6Q$, Average Total Cost $ATC = \frac{50}{Q}+3Q$, demand $P = 50-2Q$, and Marginal Revenue $MR = 50-4Q$.

This firm will decide to produce a monopoly quantity $Q_M$ that maximizes their profits. However, the efficient quantity that maximizes total surplus is $Q_E$, which is higher than $Q_M$.

How many more units would the monopoly need to produce to make the efficient level? That is, what is $Q_E-Q_M$?