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Unformatted text preview: 20 and quantity produced would be 25 . This policy would yield a loss (profit, loss, break even) to the monopolist of $ 125 . d) Given the result in (c) above, the government might decide instead to use a fair-return pricing strategy. Under this scheme, the price would be set at $ 27 and quantity produced would be 21 . This policy provides the monopolist with a break even (profit, loss, break even) outcome. e) Should the government choose to subsidize the monopolist in order to provide the public with maximum output of the firm, the subsidy would be $5 per unit, or $125 total . The price under this scenario will be $ 20 and quantity produced will be 25 . 0 z D MR Price and costs (dollars) 10 21 25 Quantity MC ATC z z z 36 34 27 25 20...
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This note was uploaded on 10/26/2009 for the course ECON 180-004-20 taught by Professor Bresnock during the Fall '09 term at UCLA.
- Fall '09