given by c(y) = y2 and faces a demand curve given by P(y) = 120 − y. a. What is his profit-maximizing level of output? What price will the monopolist charge? b. Suppose you put a lump sum tax of $100 on this monopolist. What would its output be? c. If you wanted to choose a price ceiling for this monopolist so as to maximize consumer plus producer surplus, what price ceiling should you choose? How much output will the monopolist produce at this price ceiling?
given by c(y) = y2 and faces a demand curve given by P(y) = 120 − y. a. What is his profit-maximizing level of output? What price will the monopolist charge? b. Suppose you put a lump sum tax of $100 on this monopolist. What would its output be? c. If you wanted to choose a price ceiling for this monopolist so as to maximize consumer plus producer surplus, what price ceiling should you choose? How much output will the monopolist produce at this price ceiling?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A monopolist has a cost function given by c(y) = y2 and faces a demand curve given by P(y) = 120 − y.
a. What is his profit-maximizing level of output? What price will the monopolist charge?
b. Suppose you put a lump sum tax of $100 on this monopolist. What would its output be?
c. If you wanted to choose a price ceiling for this monopolist so as to maximize consumer plus producer surplus , what price ceiling should you choose? How much output will the monopolist produce at this price ceiling?
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