Question
Assume that a monopolist has a constant Marginal Cost of production equal to $150 per unit and faces a linear demand curve for their product
Assume that a monopolist has a constant Marginal Cost of production equal to $150 per unit and faces a linear demand curve for their product as = 500 5.
a) (2 points) Write down the marginal revenue function.
b) (5 points) Find the Monopolies profit maximizing price () and corresponding output level ().
c) (5 points) What would the socially efficient values for p and q be? ( , )
d) (4 points) What is the welfare loss to society of producing rather than ?
e) (4 points) Assume the firm's cost function is = 200 + 150 and calculate the firm's profit in both the social efficient and monopoly.
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