A monopolist produces output with the following (inverse) demand function: P=120-Q where P is the market price and Q is the market demand of a number of firms. The marginal cost of each firm is constant and the same (water and labor resources come from the same source) of 60. From these market conditions, calculate the change in company profits and social gains due to a decrease in marginal costs so that they become 35 after innovation.

A monopolist produces output with the following (inverse) demand function: P=120-Q where P is the market price and Q is the market demand of a number of firms. The marginal cost of each firm is constant and the same (water and labor resources come from the same source) of 60. From these market conditions, calculate the change in company profits and social gains due to a decrease in marginal costs so that they become 35 after innovation.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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