Consider the following inverse demand curve: p = 300 – 3Q A firm's cost function is given by C(Q) = 3600 + Q² Argue that this firm must be a natural monopolist. As a monopolist, what output and price will they charge? What will their profit be? Compare this to the outcome if they behaved as though they were in a competitive market. What is the difference in welfare?

Consider the following inverse demand curve: p = 300 – 3Q A firm's cost function is given by C(Q) = 3600 + Q² Argue that this firm must be a natural monopolist. As a monopolist, what output and price will they charge? What will their profit be? Compare this to the outcome if they behaved as though they were in a competitive market. What is the difference in welfare?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.1P

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