5. A monopolist faces inverse demand P= 30−4Q and has constant marginal cost MC= 6. Currently...

5. A monopolist faces inverse demand P= 30−4Q and has constant marginal cost MC= 6. Currently the government provides a per-unit subsidys to the firm.

i. What is the quantity provided by the monopolist as a function of subsidys?What price does the monopolist charge?

ii. What is the size of the per unit subsidys for which the monopolist will produce the socially efficient quantity? How much deadweight loss is saved by this subsidy?

What is the total payment that the government must make to the monopolist if this subsidy is enacted?

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Rahul Sunny answered 1 year ago

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