Assume that the producer of beautiful cars is a monopoly (i.e., there is only one seller in the market). (a) Illustrate this monopoly seller on a diagram clearly labelling the price and quantity chosen by this seller. Explain how this car producer chooses the price to charge for its cars and the appropriate quantity to sell. (b) on your diagram from part (a) clearly label consumer surplus, producer surplus and the dead weight loss. Explain whether this car market outcome is Pareto efficient? (c) Briefly explain any three qualities of the price-setting firm.
