Consider the production of a monopolist firm under the inverse market demand function p = 305...
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Consider the production of a monopolist firm under the inverse market demand function p = 305 -0.3q, where q is the quantity the consumers demand under the price p. The inverse supply curve is the firm's MPC (marginal private cost) equaling 5 + 0.6q where q stands for the quantity the firm produces. This firm's product causes serious pollution to the water nearby, resulting in the MSC (marginal social cost) equaling 5 + 1.2q. (i). (15 marks) Find the social optimal output of the firm. (ii). (15 marks) Find the value of the dead weight loss (DWL) if nothing is done to address the problems. Consider the production of a monopolist firm under the inverse market demand function p = 305 -0.3q, where q is the quantity the consumers demand under the price p. The inverse supply curve is the firm's MPC (marginal private cost) equaling 5 + 0.6q where q stands for the quantity the firm produces. This firm's product causes serious pollution to the water nearby, resulting in the MSC (marginal social cost) equaling 5 + 1.2q. (i). (15 marks) Find the social optimal output of the firm. (ii). (15 marks) Find the value of the dead weight loss (DWL) if nothing is done to address the problems.
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Question i PD Mse 305039 5129 3055 039129 300 159 200 socially o... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133138443
7th Canadian Edition
Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham
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