In the market with market demand Qd = 128 -2P, a new firm enters that, through...

 

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In the market with market demand Qd = 128 -2P, a new firm enters that, through a process innovation, produces the same good at a lower cost C(Q) = 18 + 4Q and thereby immediately forces all other companies out of the market and thus becomes a monopolist. All costs except fixed costs are economic costs. So the fixed costs have sunk. (a) Determine the output Qm produced by the monopolist which maximizes its profit. Draw the diagram showing how the monopolist makes a decision on amount of production and price setting. (1.5points) (b) What ist the profit Im and variable profit VIIm of the monopolist? (1point) (c) Now determine the consumer surplus CS. (1point) (d) ...and overall welfare W. (1point) (e) A government agency steps in and imposes a price ceiling Pmax. How high would this upper price limit have to be to increase the total welfare W to its maximum? How high would be the amont of production which maximazes welfare? (1point) (f) ...or by how much does this increase overall welfare W? (1point) In the market with market demand Qd = 128 -2P, a new firm enters that, through a process innovation, produces the same good at a lower cost C(Q) = 18 + 4Q and thereby immediately forces all other companies out of the market and thus becomes a monopolist. All costs except fixed costs are economic costs. So the fixed costs have sunk. (a) Determine the output Qm produced by the monopolist which maximizes its profit. Draw the diagram showing how the monopolist makes a decision on amount of production and price setting. (1.5points) (b) What ist the profit Im and variable profit VIIm of the monopolist? (1point) (c) Now determine the consumer surplus CS. (1point) (d) ...and overall welfare W. (1point) (e) A government agency steps in and imposes a price ceiling Pmax. How high would this upper price limit have to be to increase the total welfare W to its maximum? How high would be the amont of production which maximazes welfare? (1point) (f) ...or by how much does this increase overall welfare W? (1point)

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Answer Step 1 EXPLANATION According to collect from the data Let us assume that the data as followed by Answer AMonopolistic competition market exists when many organizations offer competing items or ... View the full answer