hw6 - 2. (15 points) Suppose market demand is given by P =...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
ECO 300 Homework 6 Due Thursday 04/28 1. (15 points) A monopolist faces an inverse market demand P = 300 – Q. Its total cost is given by TC = 1200 + 0.5 Q 2 and its marginal cost is given by MC = Q. The monopolist’s marginal revenue is given by MR = 300 – 2Q. b. How much is the profit-maximizing output? c. Is the monopolist making any profit? How much? d. How much is the deadweight loss compared to the perfectly competitive outcome (where P = MC)?
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 2. (15 points) Suppose market demand is given by P = 120 2Q and market supply is given by P = 2Q + 20. a. What is the market equilibrium price and quantity? b. Now suppose the government provides an excise tax of $10 per unit. What will the new equilibrium quantity be? What price will the buyer pay? What price will the seller receive? c. How much is the deadweight loss due to the tax?...
View Full Document

This note was uploaded on 08/30/2011 for the course ECON 300 taught by Professor Zh during the Spring '11 term at SUNY Albany.

Ask a homework question - tutors are online