A monopolist serves a market with five potential buyers, each of whom would buy at most one piece of the monopolist's good. Anna would be willing to pay up to £50 for it, Bob up to £70, Chloe up to £90, Dave up to £110 and Elizabeth up to £130. The monopolist's variable cost function is given in below table. [Note: In parts (a) and (b), working outs only need to be shown for at least one result per line of the table.] Quantity Marginal Costs Price Marg. Revenue 1 50 2 55 3 60 d) Find the total surplus maximising (i.e., socially optimal) quantity. e) Quantify the Deadweight Loss! 4 65 5 70
A monopolist serves a market with five potential buyers, each of whom would buy at most one piece of the monopolist's good. Anna would be willing to pay up to £50 for it, Bob up to £70, Chloe up to £90, Dave up to £110 and Elizabeth up to £130. The monopolist's variable cost function is given in below table. [Note: In parts (a) and (b), working outs only need to be shown for at least one result per line of the table.] Quantity Marginal Costs Price Marg. Revenue 1 50 2 55 3 60 d) Find the total surplus maximising (i.e., socially optimal) quantity. e) Quantify the Deadweight Loss! 4 65 5 70
Chapter8: Monopoly
Section: Chapter Questions
Problem 7SQP
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![A monopolist serves a market with five potential buyers, each of whom would buy at most one piece
of the monopolist's good. Anna would be willing to pay up to £50 for it, Bob up to £70, Chloe up to
£90, Dave up to £110 and Elizabeth up to £130. The monopolist's variable cost function is given in
below table. [Note: In parts (a) and (b), working outs only need to be shown for at least one result
per line of the table.]
Quantity
1
Marginal Costs 50
Price
Marg.
Revenue
2
55
3
60
d) Find the total surplus maximising (i.e., socially optimal) quantity.
e) Quantify the Deadweight Loss!
4
65
5
70](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb0044e22-2954-4953-9283-7fbb8c02fa7d%2Fc4ee4066-6193-4dde-b526-e9c1bfc54076%2Fymwmfa_processed.png&w=3840&q=75)
Transcribed Image Text:A monopolist serves a market with five potential buyers, each of whom would buy at most one piece
of the monopolist's good. Anna would be willing to pay up to £50 for it, Bob up to £70, Chloe up to
£90, Dave up to £110 and Elizabeth up to £130. The monopolist's variable cost function is given in
below table. [Note: In parts (a) and (b), working outs only need to be shown for at least one result
per line of the table.]
Quantity
1
Marginal Costs 50
Price
Marg.
Revenue
2
55
3
60
d) Find the total surplus maximising (i.e., socially optimal) quantity.
e) Quantify the Deadweight Loss!
4
65
5
70
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