1.18. A monopolist faces the following demand curve: Q = 144/P2 where Q is the quantity demanded...

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1.18. A monopolist faces the following demand curve:

Q = 144/P2 where Q is the quantity demanded and P is price. Its average variable cost is AVC = Q1/2 and its fixed cost is 5.

a. What are its profit-maximizing price and quantity? What is the resulting profit?

b. Suppose the government regulates the price to be no greater than $4 per unit. How much will the monopolist produce? What will its profit be?

c. Suppose the government wants to set a ceiling price that induces the monopolist to produce the largest possible output. What price will accomplish this goal?

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Microeconomics

ISBN: 9780132080231

7th Edition

Authors: Robert S. Pindyck, Daniel L. Rubinfeld

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Question Posted: Oct 26, 2024 04:01 AM

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1.18. A monopolist faces the following demand curve: Q = 144/P2 where Q is the quantity demanded...

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Microeconomics

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