Consider a monopolist with the following demand and cost function: Demand: P = 200 -0.10 Cost: C = 50,000+20Q+0.025Q² a. What is the profit maximizing quantity the firm should produce and what is demand elasticity at that quantity? b. What would be the socially efficient level of output and what per-unit subsidy would the government have to give consumers so that the socially efficient level of output is realized?

Consider a monopolist with the following demand and cost function: Demand: P = 200 -0.10 Cost: C = 50,000+20Q+0.025Q² a. What is the profit maximizing quantity the firm should produce and what is demand elasticity at that quantity? b. What would be the socially efficient level of output and what per-unit subsidy would the government have to give consumers so that the socially efficient level of output is realized?

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Monopoly

Section: Chapter Questions

Problem 4CQQ

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