Consider a monopolist facing the following demand curve (same as the other quiz). P 24 22 20 18 16 14 12 10 8 6 QD 1 2 3 4 5 6 7 8 9 10 But now let's assume that the monopolist has a constant marginal cost of 8 AND a fixed cost of 28. Now let's imagine that the government wants to make this market more efficient by putting a price ceiling on the good. a. Can they make it perfectly efficient? If not, why not? (Assume everything is in the long run here.) b. If they want to make this as efficient as possible, where should they set the price ceiling? Show this on a graph. Identify the quantity, consumer surplus, and dead weight loss if there is one. Make sure to include any additional curves that may have been necessary to identify the right price ceiling.
Consider a monopolist facing the following demand curve (same as the other quiz).
P 24 22 20 18 16 14 12 10 8 6
QD 1 2 3 4 5 6 7 8 9 10
But now let's assume that the monopolist has a constant marginal cost of 8 AND a fixed cost of 28. Now let's imagine that the government wants to make this market more efficient by putting a
a. Can they make it perfectly efficient? If not, why not? (Assume everything is in the long run here.)
b. If they want to make this as efficient as possible, where should they set the price ceiling? Show this on a graph. Identify the quantity,
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