Illustrate what would be the size of resulting deadweight

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Reference no: EM1344910

The firm"s estimate of demand for the product is P = 20 - 3 (Q1 + Q2 ). How much should the firm plan to produce in each plant? At what price should it plan to sell the product? 4. Suppose that the market demand curve for a new drug, Adipose-Off, designed to painlessly reduce body fat, is given the equation P = 100 - 2Q, where P is the price in dollars per dose. Suppose also that there is a single supplier of the drug who faces a marginal cost, as well as average cost, of producing the drug equal to a constant $20 per dose. (a) What are the monopolist"s profit maximizing output and price? What is the resulting deadweight loss relative to the competitive outcome? (b) Suppose the government levies a specific tax of $5 per dose on the monopolist. What would happen to the monopolist"s profit maximizing output and price? What would happen to consumer and producer surplus? Illustrate what would be the size of the resulting deadweight loss relative to the competitive outcome? (c) Suppose the g

Reference no: EM1344910

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