2.-The following table contains information about demand of a (non-divisible) good and the marginal cost of...
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2.-The following table contains information about demand of a (non-divisible) good and the marginal cost of the only firm that operates in that market. Q P(Q) MC(Q) 1 20 2 2 17 3. 3 15 4 4 13 5 5 11 6 6 10 7 7 9 8 8 8. 9 9 7 10 10 6 11 11 5 12 a) Compute the (or rather, a) competitive price and output. That is, compute the outcome in the market if the firm behaved as a price taker. b) When the firm considers its market power, show why the firm would NOT produce the 6th unit. That is, show the effects that doing so would have on its revenues and costs and conclude that it does not pay. c) Compute the optimal policy for the monopolist, and the deadweight loss associated with the monopolist's market power. 2.-The following table contains information about demand of a (non-divisible) good and the marginal cost of the only firm that operates in that market. Q P(Q) MC(Q) 1 20 2 2 17 3. 3 15 4 4 13 5 5 11 6 6 10 7 7 9 8 8 8. 9 9 7 10 10 6 11 11 5 12 a) Compute the (or rather, a) competitive price and output. That is, compute the outcome in the market if the firm behaved as a price taker. b) When the firm considers its market power, show why the firm would NOT produce the 6th unit. That is, show the effects that doing so would have on its revenues and costs and conclude that it does not pay. c) Compute the optimal policy for the monopolist, and the deadweight loss associated with the monopolist's market power.
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