The following figure depicts one among ten identical firms in a monopolistically competitive market.Let the social surplus be valued in dollars.For the government,the benefit of regulating a market is the value of the total social surplus gained from regulation.It costs the government $100 to force all firms to produce at the socially optimal quantity of output.

a)What is the gain to the government of implementing such a regulation?
b)Should the government implement such a regulation?

Question

The following figure depicts one among ten identical firms in a monopolistically competitive market.Let the social surplus be valued in dollars.For the government,the benefit of regulating a market is the value of the total social surplus gained from regulation.It costs the government $100 to force all firms to produce at the socially optimal quantity of output.
  
a)What is the gain to the government of implementing such a regulation?
b)Should the government implement such a regulation?

Quizplus · Accepted Answer

The Answer of The following figure depicts one among ten identical firms in a monopolistically competitive market.Let the social surplus be valued in dollars.For the government,the benefit of regulating a market is the value of the total social surplus gained from regulation.It costs the government $100 to force all firms to produce at the socially optimal quantity of output.
  
a)What is the gain to the government of implementing such a regulation?
b)Should the government implement such a regulation?

The Following Figure Depicts One Among Ten Identical Firms in a Monopolistically