A monopoly has the cost function c(y) = y^2 + 2500 and is facing a market...

A monopoly has the cost function c(y) = y^2 + 2500 and is facing a market demand D( R) = 300-2p.

a) What is the inverse demand function p(y)? Having profits be π = p(y) * y - c(y), what is the profit maximising output level? What is the corresponding market price?

b) Calculate the monopolist's profit and producer surplus. What is the consumer surplus? What is the deadweight loss?

c) Ideally, what is the price and quantity that would eliminate deadweight loss?

Expert Solution

Rahul Sunny answered 2 years ago

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