A monopolist producer of a drug Zeta has demand P=180 – 0.2q and costs C=5000+30q+0.2q2. Derive...

A monopolist producer of a drug Zeta has demand P=180 – 0.2q and costs C=5000+30q+0.2q².

Derive the MC, ATC, and MR functions.

Derive the profit-maximizing price, quantity, and profit. Show on a graph.

What is the price and quantity if the monopolist loses patent protection and the industry becomes perfectly competitive? What is the size of the deadweight loss in monopoly? Show the deadweight loss triangle in the graph.

Suppose demand for apartments in Honolulu is P=6600-0.5q and supply is P=0.25q.

Derive the equilibrium price and quantity for apartments. Show on a graph. Calculate the producer and consumer surplus.

If the city of Honolulu passes a rent control, forcing a rent (or price) ceiling equal to $1800, what is the quantity supplied, quantity demanded, and the shortage? Calculate the new consumer surplus, producer surplus, and deadweight loss, and show these on your graph.

If a black market develops after the rent control, allowing landlords to charge an illegal rent, what is the highest rent that they could charge for the quantity supplied of apartments in part b? What is the new producer surplus? Comment on the effectiveness of price controls in allocating apartments to middle to lower income tenants.

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Rahul Sunny answered 2 years ago

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