The market demand function for a monopolist is p=58-2Q and its cost is C(Q)=10Q. a) Determine...

The market demand function for a monopolist is p=58-2Q and its cost is C(Q)=10Q.

a) Determine the monopolist’s price and quantity in equilibrium.

b) Suppose now that a competition authority forces the monopolist to employ marginal cost pricing. Determine the price and the quantity with this new pricing scheme.

c) Compute and compare the consumer surplus, the firm’s profit, and the social welfare under unrestricted monopoly and under marginal cost pricing. What is the deadweight loss due to unrestricted monopoly pricing?

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Expert Solution

Rahul Sunny answered 1 year ago

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