Suppose the kohlrabi industry is a natural monopoly facing the following (inverse) market demand schedule: p= 84 - Q Its cost structure (i.e., total cost schedule) is as follows: TC = 1200+ 10Q The government has established a commission to regulate the industry. Assume the commission has perfect information. Find the following in equilibrium. a. Output under Ramsey pricing regulation = b. Ramsey price = $ c. Deadweight loss under Ramsey pricing regulation = $ units HINT: Rounding any value during any intermediate step in this problem likely results in an incorrect final answer.

Suppose the kohlrabi industry is a natural monopoly facing the following (inverse) market demand schedule: p= 84 - Q Its cost structure (i.e., total cost schedule) is as follows: TC = 1200+ 10Q The government has established a commission to regulate the industry. Assume the commission has perfect information. Find the following in equilibrium. a. Output under Ramsey pricing regulation = b. Ramsey price = $ c. Deadweight loss under Ramsey pricing regulation = $ units HINT: Rounding any value during any intermediate step in this problem likely results in an incorrect final answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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