Kalamazoo Competition-Free Concrete (KCC) is a local monopolist of ready-mix concrete. Its annual demand function is Q* = 10,000 – 200P, where Pis the price, in dollars, of a cubic yard of concrete and Qis the number of cubic yards sold per year. Suppose that Kalamazoo's marginal cost is $20 per cubic yard and fixed costs are sunk. Instructions: Round your answers to 2 decimal places. a. What is the deadweight loss from monopoly pricing? b. Now suppose that fixed costs are avoidable and large enough such that the monopolist elects not to produce. What is the deadweight loss from the monopoly not producing? %24

Kalamazoo Competition-Free Concrete (KCC) is a local monopolist of ready-mix concrete. Its annual demand function is Q* = 10,000 – 200P, where Pis the price, in dollars, of a cubic yard of concrete and Qis the number of cubic yards sold per year. Suppose that Kalamazoo's marginal cost is $20 per cubic yard and fixed costs are sunk. Instructions: Round your answers to 2 decimal places. a. What is the deadweight loss from monopoly pricing? b. Now suppose that fixed costs are avoidable and large enough such that the monopolist elects not to produce. What is the deadweight loss from the monopoly not producing? %24

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.5P

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