Suppose that a monopolist faced the following demand curve for its goods. Its marginal cost per unit of production is 50, and it faces no fi xed costs

(a) Calculate the profi t-maximizing output and price.

(b) Suppose the workers negotiate a health insurance benefi t increase that increases mar ginal cost per unit from 50 to 60. Calculate the new profi t-maximizing output and price.

(c) Who bears the costs of the benefi t increase? Why?

Consider a diagram like Figure 22.3 where states are offered the opportunity to buy into