Consider a monopolist with the cost function C(q) = 6q, facing the market demand function D(p) = 20 − 2p. (a) Find the monopoly quantity and price, the monopolist’s profit and the con- sumer surplus. (b) Now suppose that the government gives to the monopolist a subsidy of $2 per unit sold. Find the monopoly quantity and price, the monopolist’s profit, the consumer surplus, and the cost of the subsidy.
Consider a monopolist with the cost function C(q) = 6q, facing the market demand function D(p) = 20 − 2p. (a) Find the monopoly quantity and price, the monopolist’s profit and the con- sumer surplus. (b) Now suppose that the government gives to the monopolist a subsidy of $2 per unit sold. Find the monopoly quantity and price, the monopolist’s profit, the consumer surplus, and the cost of the subsidy.
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.9P
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Consider a monopolist with the cost function C(q) = 6q, facing the
(a) Find the
(b) Now suppose that the government gives to the monopolist a subsidy of $2 per unit sold. Find the monopoly quantity and price, the monopolist’s profit, the
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