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Q. McCullough has a monopoly on rental dwellings in the local community. The demand for rental dwellings is P = 1,400 - 0.02Q. The resulting marginal revenue function is MR (Q) = 1,400 - 0.04Q. McCullough's marginal cost of providing rental dwellings is MC (Q) = 0.01Q + 20. Assume that to ease the burden on renters, the local community has instituted a price ceiling of $480. Does consumer surplus increase due to this price ceiling? Does social welfare increase as a result of the price ceiling?
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Substantive responses use theory, research, and experience or examples to support ideas and further the class knowledge on the discussion topic.
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