A firm (a monopoly) faces the inverse demand curve p= 400- 0.5 y. Its marginal cost is $ 12. The firm is controlled by a manager, who chooses the output to maximize the business sales (not profit) 

a) Explain why the manager is not trying to maximize profit 

b) Find the choice of y that maximizes sales 

c) How could the owner influence the manager to change his behavior 

d) Is total social welfare (which is equal to profits plus consumer surplus) more high when the firm maximizes profits, or sales (for this part, no need to prove your answer)

Answer rating: 100% (QA)

aThe monopoly is trying to maximize sales not profit The monopolist will produce the output at which ... View the full answer