Assume a monopolist’s only cost is constant marginal cost of $2. Further assume there are 10 consumers with individual inverse demand of p = 10 − 2q. (a) What is the profit maximising price and quantity for the monopolist. (b) What are the consumer and producer surplus at this outcome. (c) What is the dead weight loss (compared to the socially optimal output and price).
Assume a monopolist’s only cost is constant marginal cost of $2. Further assume there are 10 consumers with individual inverse demand of p = 10 − 2q. (a) What is the profit maximising price and quantity for the monopolist. (b) What are the consumer and producer surplus at this outcome. (c) What is the dead weight loss (compared to the socially optimal output and price).
Chapter25: Monopoly
Section: Chapter Questions
Problem 14E
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Economics
1. Assume a monopolist’s only cost is constant marginal cost of $2. Further assume there are 10 consumers with individual inverse demand of p = 10 − 2q. (a) What is the profit maximising price and quantity for the monopolist. (b) What are the
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