(Scenario: A Monopolist) A home monopolist faces a demand curve given by P- 20 - Q and has total costs given by TC - Q². By using a bit of calculus, you should be able to determine that the firm's marginal revenue is MR - 20 - 2Q and its marginal cost is MC 20. Now suppose that the country in which this monopolist is located decides to engage in international trade. The world price of the product produced by the home monopolist is $12. What is the home monopolist's profit-maximizing output level? O5 08 04

(Scenario: A Monopolist) A home monopolist faces a demand curve given by P- 20 - Q and has total costs given by TC - Q². By using a bit of calculus, you should be able to determine that the firm's marginal revenue is MR - 20 - 2Q and its marginal cost is MC 20. Now suppose that the country in which this monopolist is located decides to engage in international trade. The world price of the product produced by the home monopolist is $12. What is the home monopolist's profit-maximizing output level? O5 08 04

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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Refer to Diagram 2 above, which represents a monopolist firm, to answer the following questions. product = marginal product x selling price per unit). What quantity will this firm produce and what price will it charge? Suppose this monopolist firm becomes regulated and the regulatory agency wants to achieve economic efficiency. What price would the agency require the monopoly to charge and what quantity will the firm produce as a result? If the monopolist charges a price that will achieve economic efficiency, will the monopolist be making a profit or loss? Explain your answer with a calculation. Now suppose the government regulates the monopoly by imposing a price ceiling of $60. How many units will be produced? Will every customer who is willing to pay the ceiling price of $60 be able to buy the product? Explain why or why not. Based on the price ceiling of $60, what will be the profit of this monopolist?
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