In the following, use the model in Exercise 3.7. Refer to Exercise 3.7, Suppose that the inverse
Question:
Refer to Exercise 3.7,
Suppose that the inverse demand curve for paper is ( = 200 - Q, the private marginal cost (unregulated competitive market supply) is MC( = 80 + Q, and the marginal harm from gunk is MCg = Q.
a. What is the unregulated monopoly equilibrium?
b. How could you optimally regulate the monopoly? What is the resulting (socially optimal) equilibrium?
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a The unregulated monopoly output is th...View the full answer
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Related Book For 
Microeconomics Theory and Applications with Calculus
ISBN: 978-0133019933
3rd edition
Authors: Jeffrey M. Perloff
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