Assume the government implements mc pricing regulation

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Q. Consider the marketplace for scooters. Assume it is a (single-price) monopolistic market. The marketplace demand for scooters is given by the equation PD (Q) = 200 Q . The industry faces costs given by the total cost function TC (Q) = 2Q 2 + 50Q + 10 also marginal cost function MC (Q) = 4Q + 50 . (a) Illustrate what will be this industry's profit maximizing quantity? (b) Illustrate what profit does this industry earn? (c) Compute the deadweight loss generated by this monopoly. Now Assume this monopolist is a perfect price discriminator. (d) Illustrate what will be this industry's profit maximizing quantity? (e) Illustrate what profit does this industry earn? (f) Compute the deadweight loss generated by this monopoly. Question 3 (14 points) (a) Consider a natural monopolist in the long-run. List the two types of regulation associated with natural monopolies (mentioned in lecture). For every regulation state the price also quantity set, profits earned also efficiency status (is there a DWL?). (b) Illustrate a monopolist with a U-shaped ATC curve. Assume the government implements MC pricing regulation. Illustrate the effects of this approach on the diagram, clearly Demonstrate price charged, quantity produced, profits, deadweight loss.

Reference no: EM1323210

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