Consider the following inverse demand curve: p = 300 – 3Q A firm's cost function is given by C(Q) = 3600 + Q² Argue that this firm must be a natural monopolist. As a monopolist, what output and price will they charge? What will their profit be? Compare this to the outcome if they behaved as though they were in a competitive market. What is the difference in welfare?

Economics:
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ISBN:9781285859460
Author:BOYES, William
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Chapter28: Antitrust And Regulation
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Consider the following inverse demand curve:
p = 300 – 3Q
A firm's cost function is given by
C(Q) = 3600 + Q²
Argue that this firm must be a natural monopolist. As a monopolist,
what output and price will they charge? What will their profit be?
Compare this to the outcome if they behaved as though they were in
a competitive market. What is the difference in welfare?
Transcribed Image Text:Consider the following inverse demand curve: p = 300 – 3Q A firm's cost function is given by C(Q) = 3600 + Q² Argue that this firm must be a natural monopolist. As a monopolist, what output and price will they charge? What will their profit be? Compare this to the outcome if they behaved as though they were in a competitive market. What is the difference in welfare?
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