Question
A firm faces a demand curve of p = 11 - Qand has a marginal cost of $6 perunit. A regulatory agency imposes a price
A firm faces a demand curve of p = 11 - Qand has a marginal cost of $6 perunit. A regulatory agency imposes a price ceiling of $7. Find the optimal price price and compare it to the price the firm would have charged if there was no price ceiling. What is the highest level of output that can be achieved if a regulator were free in choosing a price ceiling.
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Principles of Macroeconomics
Authors: Karl E. Case, Ray C. Fair, Sharon E. Oster
12th edition
134078802, 978-0134078809
