Chapter13: Monopoly And Antitrust
Section: Chapter Questions
Problem 8P
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Question
ASAP
Suppose the market for kiwis has a demand curve of the form:
Qd = 200-2Pd
And that the costs of the
Total Cost (Q) = Variable Cost (Q) + Fixed Cost.
C (Q) = Q² + 100.
That is, its marginal cost will be:
MgC (Qs) = 2Qs = Ps
A. If the Government regulates this monopoly so that it does not generate welfare losses, how much should the maximum price to impose be?
B. If the Government decides to grant a subsidy to reach the amount of the social optimum, would it stop having a loss of welfare?
C. Bonus How much the subsidy should be for each unit so that the amount is reached in the social optimum.
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