The market demand for a monopoly is given by P = 90 – 2Q, where Q is the number of the product demanded at price P. The total cost function is given by TC = 90 + 20Q +0.5Q2. a) If the firm is a single-price monopoly, what are the equilibrium quantity and price? What are the resultant consumer surplus, producer surplus and social welfare? b) If the government forced the firm to behave as if it were a perfect competitor, what are the equilibrium quantity and price? What are the resultant consumer surplus, producer surplus and social welfare? c) How much does social welfare increase when the firm moves from monopoly to competition?
The market demand for a monopoly is given by P = 90 – 2Q, where Q is the number of the product demanded at price P. The total cost function is given by TC = 90 + 20Q +0.5Q2. a) If the firm is a single-price monopoly, what are the equilibrium quantity and price? What are the resultant consumer surplus, producer surplus and social welfare? b) If the government forced the firm to behave as if it were a perfect competitor, what are the equilibrium quantity and price? What are the resultant consumer surplus, producer surplus and social welfare? c) How much does social welfare increase when the firm moves from monopoly to competition?
Chapter8: Monopoly
Section: Chapter Questions
Problem 15SQ
Related questions
Question
The market demand for a
the number of the product demanded at
20Q +0.5Q2.
a) If the firm is a single-price monopoly, what are the
are the resultant consumer surplus,
b) If the government forced the firm to behave as if it were a perfect competitor, what are
the equilibrium quantity and price? What are the resultant consumer surplus, producer
surplus and social welfare?
c) How much does social welfare increase when the firm moves from monopoly to
competition?
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