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HW6 - & producer surplus in this market when the market...

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Homework 6 Question 1: Monopoly Consider the following demand curve: P = 24 – Q d , which implies that MR= 24 – 2Q d. Now consider a Monopoly with TC and MC given, respectively, by TC = Q 2 + 36, MC = 2*Q, where Q is the quantity supplied by the monopolist. a. Consider a single price monopoly. What is the optimal monopoly price and quantity? What is the economic profit of the monopoly? b. What quantity would a perfectly competitive industry (with the same costs and facing the same demand) produce? c. Producer surplus is the area below the price and above the MC curve (note that profits equal producer surplus minus fixed costs). Graphically show the consumer
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Unformatted text preview: & producer surplus in this market when the market was in perfect competition and under a monopolistic environment. d. Evaluate numerically producer surplus, consumers’ surplus in this market when the market is in perfect competition and under monopolistic environment. e. Is the outcome under single- price monopoly efficient? f. Suppose that in order to achieve efficiency the government is thinking about allowing the monopolist to perfectly price discriminate. Would the government achieve its goal by taking this measure?...
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