A monopolist faces the following demand curve: P = C = 100 – 5Q + Q². 55 – 2Q. Its cost function is given by а. What price should the monopolist set to maximize its profit? How much output does it produce? What is the amount of profit and consumer surplus that is generated? b. Suppose the government imposes a price ceiling of 40/-. What are the consequences of such a price regulation? c. Suppose now the government imposes a price ceiling of 30/-. What are the consequences of such a regulation? What is the amount of profit and consumer surplus that is generated? How does it compare to part (a). d. Suppose now that the price ceiling is set at 20/-. How does this decision change affect the price charged, quantity produced?

A monopolist faces the following demand curve: P = C = 100 – 5Q + Q². 55 – 2Q. Its cost function is given by а. What price should the monopolist set to maximize its profit? How much output does it produce? What is the amount of profit and consumer surplus that is generated? b. Suppose the government imposes a price ceiling of 40/-. What are the consequences of such a price regulation? c. Suppose now the government imposes a price ceiling of 30/-. What are the consequences of such a regulation? What is the amount of profit and consumer surplus that is generated? How does it compare to part (a). d. Suppose now that the price ceiling is set at 20/-. How does this decision change affect the price charged, quantity produced?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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