MR = 100 - 2q
MC = 4 + 2q
Under Perfect Competition
EQ Price = 68
EQ Quantity = 32
CS = 512
PS = 1024
TW = 1536
Under Monopoly
EQ Quantity = 24
EQ Price = 76
Now ...
- Calculate the Consumer Surplus, Producer Surplus and Welfare levels under monopoly.
- How much deadweight loss does the monopolist create?
- What could the government do to regulate the monopolist?
Homework Answers
Under monopolist
A. Consumer surplus= 0.5*(100-76)*24=$288
Producer surplus= ((0.5*(52-4)(24))+((76-52)*24)= 576+ 576= $1152
Total welfare= CS +PS=$1440
B. Deadweight loss= 0.5(76-52)(32-24)= $96
C. Government can use various methods to control the monopolist like taxing, price capping, antitrust laws.
Add Answer to:
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