A profit-maximizing monopolist produces electricity. Its cost function is given by C(y) 10y. The price of...

 

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A profit-maximizing monopolist produces electricity. Its cost function is given by C(y) 10y. The price of unit electricity is denoted by pe. Suppose that the market demand is given by y = D(p.) = 40-Pe- 1. Write down the monopolist's profit maximization problem. 2. Draw MC(y), MR(y), and pe(y) in a same figure. 3. Determine the optimal levels of production yM and price p 4. Illustrate that the monopolist price p is higher than the competitive equilibrium price 5. Determine CSM, PSM, and DWLM A profit-maximizing monopolist produces electricity. Its cost function is given by C(y) 10y. The price of unit electricity is denoted by pe. Suppose that the market demand is given by y = D(p.) = 40-Pe- 1. Write down the monopolist's profit maximization problem. 2. Draw MC(y), MR(y), and pe(y) in a same figure. 3. Determine the optimal levels of production yM and price p 4. Illustrate that the monopolist price p is higher than the competitive equilibrium price 5. Determine CSM, PSM, and DWLM

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