Q12. A monopolist with constant marginal costs is operating at an output level where the elasticity of demand is given by = -1.5. The government now imposes a quantity tax of £2 per unit of output. If the demand curve facing the monopolist is linear, how much does the price rise? For a linear demand curve, the price rises by half the change in cost. In this case, that's £1. The elasticity is not needed to solve this problem..

Q12. A monopolist with constant marginal costs is operating at an output level where the elasticity of demand is given by = -1.5. The government now imposes a quantity tax of £2 per unit of output. If the demand curve facing the monopolist is linear, how much does the price rise? For a linear demand curve, the price rises by half the change in cost. In this case, that's £1. The elasticity is not needed to solve this problem..

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.1P

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Give typing answer with explanation and conclusion A monopolist has a demand curve given by P = 88 − Q and a total cost curve given by TC = 34 + Q2. The associated marginal cost curve is MC = 2Q. Suppose the monopolist also has access to a foreign market in which he can sell whatever quantity he chooses at a constant price of 60. How much will he sell in the foreign market? What will his new quantity and price be in the original market?
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O OO The above graph shows the market demand function for a product. Assume that the market is served by a perfectly-price-discriminating monopolist with a constant marginal cost of production equal to $4 (MC = $4) and no fixed cost (FC = 0). The deadweight loss equals: DWL - $72 DWL - $0 DWL- -$48 DWL - $84 DWL-$36 $30 $28 $26 $24 $22 $20 Question 23 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
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2
am. 110.