Continue with your analysis of the monopoly cable-television company with demand of Qd = 60 - P/2 (alternatively, you can write the demand equation as Qd = 60 – 0.5P) and MC = 0.5Q + 30. Explain how you’ve determined the socially optimal output level. How does the socially optimal output compare to the monopolist output in terms of individual CS, PS, and DWL (e.g., compare CSm and CSSOC, and so on)? How does the total surplus (sum of consumer and producer surpluses) compare between the two situations? (Narrative response; suggested length of four to eight sentences or one to two paragraphs. It might be useful to create a table to contrast the two settings.)
Continue with your analysis of the monopoly cable-television company with demand of Qd = 60 - P/2 (alternatively, you can write the demand equation as Qd = 60 – 0.5P) and MC = 0.5Q + 30. Explain how you’ve determined the socially optimal output level. How does the socially optimal output compare to the monopolist output in terms of individual CS, PS, and DWL (e.g., compare CSm and CSSOC, and so on)? How does the total surplus (sum of consumer and producer surpluses) compare between the two situations? (Narrative response; suggested length of four to eight sentences or one to two paragraphs. It might be useful to create a table to contrast the two settings.)
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.6P
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Continue with your analysis of the
- Explain how you’ve determined the socially optimal output level. How does the socially optimal output compare to the monopolist output in terms of individual CS, PS, and DWL (e.g., compare CSm and CSSOC, and so on)? How does the total
surplus (sum of consumer and producer surpluses) compare between the two situations? (Narrative response; suggested length of four to eight sentences or one to two paragraphs. It might be useful to create a table to contrast the two settings.)
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