A monopolist has a cost function of c(y)=yso that its marginal costs are constant at $1 per unit. it faces the following demand curve: 0 if p> 20 or 100/y if p is less than or equal to 20 find (1) What is the profit-maximizing choice of output? (2) If the government could set a price ceiling on this monopolist in order to force it to act as a competitor, what price should the government set? 3) What output would the monopolist produce if he is forced to behave as a competitor?

Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter9: Monopoly
Section: Chapter Questions
Problem 7SQ
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A monopolist has a cost function of c(y)=yso that its marginal costs are constant at $1 per unit. it faces the following demand curve: 0 if p> 20 or 100/y if p is less than or equal to 20 find (1) What is the profit-maximizing choice of output? (2) If the government could set a price ceiling on this monopolist in order to force it to act as a competitor, what price should the government set? 3) What output would the monopolist produce if he is forced to behave as a competitor?

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