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bronzefox742Lv1
28 Sep 2019
A natural monopolist faces the following demand curve: P = 334 - 4Q, its total cost is given by TC = 1500 + 14Q (marginal cost is the slope of total cost).
(a) If the government regulates the monopolist to charge a socially optimal price, what price will it charge and how many units will it sell? How much are the profit, consumer surplus, and producer surplus?
(b) If it is not a regulated monopolist, what is its profit-maximizing price and quantity (assuming single price monopolist)? How much are the profit, consumer surplus, producer surplus, and deadweight loss?
(c) If the regulated monopolist is allowed to charge a fair return price (which is $34), how much are the consumer surplus, producer surplus, and deadweight loss?
A natural monopolist faces the following demand curve: P = 334 - 4Q, its total cost is given by TC = 1500 + 14Q (marginal cost is the slope of total cost).
(a) If the government regulates the monopolist to charge a socially optimal price, what price will it charge and how many units will it sell? How much are the profit, consumer surplus, and producer surplus?
(b) If it is not a regulated monopolist, what is its profit-maximizing price and quantity (assuming single price monopolist)? How much are the profit, consumer surplus, producer surplus, and deadweight loss?
(c) If the regulated monopolist is allowed to charge a fair return price (which is $34), how much are the consumer surplus, producer surplus, and deadweight loss?
syedazmath1627Lv10
3 Feb 2023
Chika IlonahLv10
28 Sep 2019
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