A monopolist serves a market with five potential buyers, each of whom would buy at most one piece of the monopolist's good. Anna would be willing to pay up to £50 for it, Bob up to £70, Chloe up to £90, Dave up to £110 and Elizabeth up to £130. The monopolist's variable cost function is given in below table. [Note: In parts (a) and (b), working outs only need to be shown for at least one result per line of the table.] Quantity Marginal Costs Price Marg. Revenue 1 50 2 55 3 60 d) Find the total surplus maximising (i.e., socially optimal) quantity. e) Quantify the Deadweight Loss! 4 65 5 70

A monopolist serves a market with five potential buyers, each of whom would buy at most one piece of the monopolist's good. Anna would be willing to pay up to £50 for it, Bob up to £70, Chloe up to £90, Dave up to £110 and Elizabeth up to £130. The monopolist's variable cost function is given in below table. [Note: In parts (a) and (b), working outs only need to be shown for at least one result per line of the table.] Quantity Marginal Costs Price Marg. Revenue 1 50 2 55 3 60 d) Find the total surplus maximising (i.e., socially optimal) quantity. e) Quantify the Deadweight Loss! 4 65 5 70

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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