Question
35. An amusement park faces a demand curve of Q = 40 - 0.4P and marginal cost of MC = 1.25Q, where Q is
35. An amusement park faces a demand curve of Q = 40 - 0.4P and marginal cost of MC = 1.25Q, where Q is measured in thousands of customers. You may find it useful to draw a sketch of this market. Note that MC are increasing, not constant. a. Assume first that this is a perfectly competitive market, what is the competitive equilibrium (P and Q)? b. Calculate the consumer surplus and producer surplus if this is a perfectly competitive market? c. Now assume the amusement park is a monopolist. What is their profit maximizing level of output and what price do they charge? d. Calculate the consumer and producer surplus in this monopoly. How much is deadweight loss.
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Get StartedRecommended Textbook for
Microeconomics
Authors: Robert Pindyck, Daniel Rubinfeld
8th edition
978-0132870436, 132870436, 013285712X, 978-0133371178, 133371174, 978-0132857123
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