Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 14, Problem 14.7P
a)
To determine
To find: The output and price in the case of
b)
To determine
To find: Total loss of consumer surplus.
c)
To determine
To find: The graph for the calculated results.
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Consider a monopoly market in which the market demand curve is given by P = 240 – 2Q, the marginal revenue curve is MR = 240 – 4Q, the marginal cost curve is MC = 2Q, and there are zero fixed costs. Suppose the government intervenes and turns the market into a competitive market, and all the firms in the market have the same marginal cost curve as the monopolist, MC = 2Q, and zero fixed costs. How much is the resulting gain in total surplus?[12:17]800
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Please refer to the figure provided.
Imagine that this market could be perfectly competitive, controlled by a monopolist who charges a single price or a monopolist who charges each customer a different price
1. How much is producer surplus if the market is controlled by a single-price monopolist?
$
2. Suppose now the monopolist is able to charge all customers the maximum price they are willing to pay, how much is the producer surplus?
Question 27
Consider a monopoly market in which the market demand curve is given by P = 240 – 2Q, the marginal revenue curve is MR = 240 – 4Q, the marginal cost curve is MC = 2Q, and there are zero fixed costs. Suppose the government intervenes and turns the market into a competitive market, and all the firms in the market have the same marginal cost curve as the monopolist, MC = 2Q, and zero fixed costs. How much is the resulting gain in total surplus?
300
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600
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