A monopolist can produce at a constant marginal cost of $5 and a fixed cost of $55. It faces a market demand curve given by Q = 24- P/4. a. Calculate the profit-maximizing price and quantity for this monopolist. Also, calculate its profits.
A monopolist can produce at a constant marginal cost of $5 and a fixed cost of $55. It faces a market demand curve given by Q = 24- P/4.
a. Calculate the profit-maximizing
monopolist. Also, calculate its profits.
b. Suppose a competitive firm has the same constant marginal cost of £5. Find the profit maximising output for this firm. What is the price that the competitive firm must charge?
c. The government decides to impose a new policy on this monopolist. In particular, the government wants to introduce price regulation such that the regulated price will consequently make this monopolist earns zero profit only. What is the regulated price that this monopolist should charge? How many quantities of output are produced with this new regulated price?
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