A monopolist facing a demand p=1000 - 10Q has costs TC(Q) = 5Q^2 + 100Q. (a) What is the monopolist’s profit maximizing quantity and price? What is the induced DWL? (b) Suppose, on top of the costs above, the firm now also pays; (i) A flat fee of 1000 dollars, (ii) half of the profits, (iii) 150 dollars per unit sold, (iv) half of the revenue.
A monopolist facing a demand p=1000 - 10Q has costs TC(Q) = 5Q^2 + 100Q.
(a) What is the monopolist’s profit maximizing quantity and
(b) Suppose, on top of the costs above, the firm now also pays; (i) A flat fee of 1000 dollars, (ii) half of the profits, (iii) 150 dollars per unit sold, (iv) half of the revenue.
Separately for each of these 4 cases, calculate the profit maximizing price and quantity for the monopolist with these new augmented costs. Does any of these scenarios alter the DWL associated with the
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