Draw the market for trash pick-up by local government monopoly provider. Qd = 3000 – P....

Draw the market for trash pick-up by local government monopoly provider. Qd = 3000 – P. The Marginal Revenue for the provider is 3000 – 2Q. Marginal Cost = Q. NOTE P is measured in cents.
1. What price would maximize total surplus?
2. If the government were to privatize the trash collection
  1. What Quantity will the new monopolist produce? What will be the price?
  2. Show the profits (producer surplus) of the new private monopoly.
  3. Show the dead weight loss created by the monopolist.
  4. Why might the government do this given your answers above?

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Expert Solution

Rahul Sunny answered 1 year ago

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