Question
Consider a monopolist who has a cost function () = 6 and faces demand () = 22 - . a. Calculate consumer surplus, producer surplus,
Consider a monopolist who has a cost function () = 6 and faces demand () = 22 - . a. Calculate consumer surplus, producer surplus, and social surplus in this market. b. Calculate consumer surplus, producer surplus, and social surplus in this market if there was perfect competition. c. Calculate the offset loss of a monopoly. d. Show your answers in (a), (b) and (c) in a diagram. e. Assume that the government subsidizes producers with 4 per unit. Calculate consumer surplus, producer surplus, and social surplus after subsidy. f. How do the results change if producers receive a one-off subsidy instead of a unit subsidy?
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