A monopolist can produce at a fixed cost of £55 and a constant marginal cost of £5. It is confronted with a market demand curve of Q = 24- P/4. a) Determine the monopolist's profit-maximizing price and quantity. Calculate the profits as well. b) Assume that all firms have the same constant marginal cost of £5. Find the firm's profit-maximizing output. What must the competitive firm charge as a price? c)The government decides to change the monopolist's policy. The government, in particular, intends to impose price regulation so that the regulated price results in the monopolist earning zero profit. What should this monopolist charge as a regulated price? With this new regulated pricing, how many units of output were produced?

Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter13: Antitrust And Regulation
Section: Chapter Questions
Problem 10SQP
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A monopolist can produce at a fixed cost of £55 and a constant marginal cost of £5. It is confronted with a market demand curve of Q = 24- P/4.
a) Determine the monopolist's profit-maximizing price and quantity. Calculate the profits as well.
b) Assume that all firms have the same constant marginal cost of £5. Find the firm's profit-maximizing output. What must the competitive firm charge as a price?

c)The government decides to change the monopolist's policy. The government, in particular, intends to impose price regulation so that the regulated price results in the monopolist earning zero profit. What should this monopolist charge as a regulated price? With this new regulated pricing, how many units of output were produced?

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