Consider a firm, which is a monopoly in the market, with a (short-run) total cost function...
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Consider a firm, which is a monopoly in the market, with a (short-run) total cost function given by [40+0.1Q² if Q#0 if Q = 0. 20 Assume that the market demand for the product of this firm is given by VPER Q(P) = max{100 - 10P, 0} . a. How much would the firm produce and what would the market price of the good be? VQER+ TC(Q) = b. What is the profit of the firm at equilibrium? c. What is the consumers' surplus, producer surplus and dead-weight loss? What type of policy can the government use in order to eliminate the dead- weight loss? You should not only state the type of policy but also state the relevant numerical values. Consider a firm, which is a monopoly in the market, with a (short-run) total cost function given by [40+0.1Q² if Q#0 if Q = 0. 20 Assume that the market demand for the product of this firm is given by VPER Q(P) = max{100 - 10P, 0} . a. How much would the firm produce and what would the market price of the good be? VQER+ TC(Q) = b. What is the profit of the firm at equilibrium? c. What is the consumers' surplus, producer surplus and dead-weight loss? What type of policy can the government use in order to eliminate the dead- weight loss? You should not only state the type of policy but also state the relevant numerical values.
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SOLUTION a To find the profit maximizing quantity we need to calculate the marginal revenue MR and m... View the full answer
Related Book For
Macroeconomics Principles, Applications, and Tools
ISBN: 978-0132555234
7th Edition
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
Posted Date:
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