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Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
Edition 12ISBN: 978-1133189022Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
Edition 12ISBN: 978-1133189022 Exercise 26
A monopolist can produce at constant average and marginal costs of AC = MC= 5. The firm faces a market demand curve given by Q = 53 - P. The monopolist's marginal revenue curve is given by MR = 53 -2Q.
a. Calculate the profit-maximizing price-quantity combination for the monopolist. Also calculate the monopolist's profits and consumer surplus.
b. What output level would be produced by this industry under perfect competition (where price = marginal cost)?
c. Calculate the consumer surplus obtained by consumers in part b. Show that this exceeds the sum of the monopolist's profits and consumer surplus received in part a. What is the value of the deadweight loss'' from monopolization?
a. Calculate the profit-maximizing price-quantity combination for the monopolist. Also calculate the monopolist's profits and consumer surplus.
b. What output level would be produced by this industry under perfect competition (where price = marginal cost)?
c. Calculate the consumer surplus obtained by consumers in part b. Show that this exceeds the sum of the monopolist's profits and consumer surplus received in part a. What is the value of the deadweight loss'' from monopolization?
Explanation
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The consumer surplus is the difference b...
Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder
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