A monopolist with total cost 80 - 20Q + Q2 and marginal cost MC = 2Q - 20 faces average revenue (demand) P = 1000 - Q and hence marginal revenue MR = 1000 - 2Q. (a) Calculate the price that the monopolist will charge and the quantity of output. (b) Assume that the government sets a price ceiling at the competitive price. Calculate (i) the quantity supplied by the monopolist (ii) the monopolist's profit. (c) Calculate the deadweight loss from monopoly power in (a)
A monopolist with total cost 80 - 20Q + Q2 and marginal cost MC = 2Q - 20 faces average revenue (demand) P = 1000 - Q and hence marginal revenue MR = 1000 - 2Q. (a) Calculate the price that the monopolist will charge and the quantity of output. (b) Assume that the government sets a price ceiling at the competitive price. Calculate (i) the quantity supplied by the monopolist (ii) the monopolist's profit. (c) Calculate the deadweight loss from monopoly power in (a)
Chapter25: Monopoly
Section: Chapter Questions
Problem 14E
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A monopolist with total cost 80 - 20Q + Q2 and marginal cost MC = 2Q - 20 faces average revenue (demand) P = 1000 - Q and hence marginal revenue MR = 1000 - 2Q.
(a) Calculate the price that the monopolist will charge and the quantity of output.
(b) Assume that the government sets a
(i) the quantity supplied by the monopolist
(ii) the monopolist's profit.
(c) Calculate the
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Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning