In the market for college degrees, there are many buyers but only 1 seller. Qd =...

In the market for college degrees, there are many buyers but only 1 seller.

Qd = 1000 – 2P. This implies that Price or Private MB = 500 - .5Q.

Education has positive externalities. Assume each degree has a $50 value to society.

Such that the Social MB = 550 - .5Q. MC = 100.

What is the efficient amount for Q and the corresponding P and Total Surplus?
Remembering Revenue = PQ, what is the equation for marginal revenue for the supplier?
What Q will the monopolist produce? And what will P be? What is Total Surplus under this situation? NOTE, IN THIS PRIVATE MARKET STUDENTS CHOOSE WHETHER TO BUY BASED ON THEIR PRIVATE MB.

Expert Solution

Rahul Sunny answered 1 year ago

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