5. Market Power A monopolist has a cost function C(q) = 2q and faces a demand curve p = 10-q. a. Find the profit maximizing quantity and price. b. Find deadweight loss.

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5. Market Power
A monopolist has a cost function C(q) = 2q and faces a demand curve p = 10-q.
a. Find the profit maximizing quantity and price.
b. Find deadweight loss.
6. Public Goods
Say we have a PPF 2² + y² = 2. z is a private good and y is a public good. A representative
consumer i out of 100 people consumes z; = 100 and y;= y (because a public good is not
excludable) and has a utility function U(1,,y) =1₂y=100
a. What is the competitive market outcome, roughly speaking?
b. What is the socially optimal z and y?
Transcribed Image Text:5. Market Power A monopolist has a cost function C(q) = 2q and faces a demand curve p = 10-q. a. Find the profit maximizing quantity and price. b. Find deadweight loss. 6. Public Goods Say we have a PPF 2² + y² = 2. z is a private good and y is a public good. A representative consumer i out of 100 people consumes z; = 100 and y;= y (because a public good is not excludable) and has a utility function U(1,,y) =1₂y=100 a. What is the competitive market outcome, roughly speaking? b. What is the socially optimal z and y?
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