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As the manager of a monopoly, you face potential government regulation. Your inverse demand is P = 25 - 1 Q, and your costs are
As the manager of a monopoly, you face potential government regulation. Your inverse demand isP= 25 - 1Q,and your costs areC(Q) = 5Q.
a. Determine the monopoly price and output.
Monopoly price: $_________
Monopoly output:_____units
b. Determine the socially efficient price and output.
Socially efficient price: $_________
Socially efficient output:_________units
c. What is the maximum amount your firm should be willing to spend on lobbying efforts to prevent the price from being regulated at the socially optimal level?
$______
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