You are an industry analyst who specializes in an industry where the market inverse demand is P

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You are an industry analyst who specializes in an industry where the market inverse demand is P 200 4Q. The external marginal cost of producing the product is MCExternal = 6Q, and the internal cost is MCInternal = 12Q.

a. What is the socially efficient level of output?

b. Given these costs and market demand, how much output would a competitive industry produce?

c. Given these costs and market demand, how much output would a monopolist produce?

d. Discuss actions the government might take to induce firms in this industry to produce the socially efficient level of output.

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Managerial Economics and Business Strategy

ISBN: 978-0073523224

8th edition

Authors: Michael Baye, Jeff Prince

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Question Posted: Apr 18, 2014 09:06 AM

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You are an industry analyst who specializes in an industry where the market inverse demand is P

Question:

Step by Step Answer:

a Set P MC External MC Internal to get 200 4Q 18Q Solving yields ...View the full answer

Managerial Economics and Business Strategy

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