A monopolist operates in a market where the inverse demand function is given by P=300-10Q, and it
Question:
A monopolist operates in a market where the inverse demand function is given by P=300-10Q, and it has a total cost function C(Q)=100Q+900.Derive the monopolist’s average cost function and marginal cost function, and represent them on a graph. Is this a natural monopoly? Explain your answer.Find the quantity produced by the monopolist, the corresponding price and the monopolist’s profits.Assume the government decides to regulate this market and forces the monopolist to set the price equal to its marginal cost. What would be the new quantity produced and the new profit?Represent and compute the consumer surplus, producer surplus and deadweight loss connected to the market outcomes found at points (b) and (c). How much is the inefficiency generated by the monopoly outcome?
