Question: 5. Suppose a monopolist faces the inverse demand function p = a by where p is the price and y is the quantity. Its cost

5. Suppose a monopolist faces the inverse demand function p = a by where p is the price and y is the quantity. Its cost function is To (y) = cyz. The government is considering giving a per unit production subsidy, s. a. Calculate consumer and producer surplus and cost of the subsidy as a function of s. b. Calculate the optimal subsidy. c. Comment on your results

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